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Full text of "Sales-tax data"

SALES-TAX DATA 



Compiled by the 

STAFF OF THE JOINT COMMITTEE ON 
INTERNAL REVENUE TAXATION 

AND PRINTED PURSUANT TO 

Section 5011 (c) of 
The Internal Revenue Code 




Note: This compilation contains merely data and 
reaches no conclusions as to the merits or demerits 
of a general sales tax. 



UNITED STATES 

GOVERNMENT PRINTING OFFICE 

WASHINGTON : 1942 



EXPLANATORY NOTE 

The data contained herein is presented for the purpose of analyzing- 
general sales taxes. The compilation does not purport to be all 
inclusive, but it is believed it will be useful to the committee in con- 
sideration of the general sales tax problem. 

n 



TABLE OF CONTENTS 



Page 
Part T. Estimates of sales-tax bases 1 

A. Retail-tax base 3 

B. General manufacturers' excise-tax base 4 

Part II. Consumer incomes and business indicators 5 

A. Consumer incomes and expenditures, 1935 and 1941 5 

Table 1. Distribution of population among four con- 
sumer groups and aggregate and per capita 

income of each group, 1941 and 1942 7 

Table 2. Number of families and single consumers 
and average size and average and aggregate in- 
come of each group, 1941 and 1942___'^ 8 

Table 3. Distribution of families and single con- 
sumers and aggregate income received, by income 

levels, 1941 and estimated 1942 ! 9 

Table 4A. Aggregate outlay of single individuals for 
consumption, gifts, and personal taxes, and sav- 
ings, by income level, 1935-36 '_ 10 

Table 4B. Aggregate outlay of single consumers in 
the United States for consumption, gifts, and per- 
sonal taxes and savings, by income level, 1941__ 11 
Table 5A. Average outlay of single individuals for 
consumption, gift, and personal taxes, and sav- 
ings, by income level, 1935-36 12 

Table oB. Average outlay of single consumers in 
the United States for consumption, gifts, and per- 
sonal taxes, and savings, by income level, 1941 _^ 13 
Table 6x4. Aggregate expenditures of single indi- 
viduals for main categories of consumption, by 

income level, 1935-36 "_ 14 

Table 6B. Aggregate expenditures of single con- 
sumers in the United States for main categories 

of consumption, by income level, 1941 15 

Table 7A. Average expenditures of single individuals 
for main categories of consumption, Ijv Income 

level 1935-36; :__" 16 

Table 7B. Average expenditures of single consumers 
in the United States for main categories of con- 
sumption, by income level, 1941 17 

Table 8A. Aggregate expenditures of American 
families for main categories of consumption, by 

income level, 1935-36 .___ 18 

Table SB. Aggregate expenditures of all families in 
the United States for main categories of consump- 
tion, by income level, 1941 19 

Table 9A. Average outlay of American families for 
consumption, gifts and personal taxes, and sav- 
ings, by income level, 1941 20 

Table 9B. Average outlay of all families in the 
United States for consumption, gifts and personal 

taxes, and savings, by income level, 1941 21 

Table lOA. Aggregate outlay of American families 
for consumption, gifts and personal taxes, and 

savings, by income level, 1935-36 22 

Table lOB. Aggregate outlay of families in the 
United States for consumption, gifts and personal 
taxes, and savings, by income level. 1941 23 

m 



IV CONTENTS 

Part IT. Consumer incomes and business indicators — Continued. Page 

A. Consumer incomes and expenditures, 1935 and 1941 — Con. 

Table 11 A. Average expenditures of American 
families for main categories of consumption, by 

income level, 1935-36 24 

Table IIB. Average expenditures of all families in 
the United States for main categories of con- 
sumption, by income level, 1941 25 

B. National income and business indicators 26 

Table 1. National income by major industrial source 

for selected j'ears 26 

Table 2. National income in current and 1935-39 
dollars and per capita income in 1935-39 dollars, 

1929-41 26 

Table 3. National income by distributive shares in 

selected years 27 

Table 4. Selected business indicators for specified 

years and percentage changes 28 

Part III. State sales-tax data 33 

Table 1 . State general sales tax rates 33 

Table 2. State general sales tax collections, fiscal j'ears 1940 

and 1941 33 

Table 3. Costs of collection, State general sales and use 

taxes, 1940 - 34 

Table 4. Showing percentage of general sales tax collections, 

by States, to l^tal State collections, fiscal 1941 34 

Table 5. Per capita collection of general sales taxes, fiscal 

1941 35 

Table 6. State tax collections, fiscal 1941 35 

Table 7. State tax collections, fiscal 1941, by distributions. 36 
Table 8. Percentage of all State sales taxes to total State 

taxes, by States, fiscal year 1941 37 

Table 9. Per capita State tax collections, fiscal year 1941 _. 38 
Table 10. States imposing both income taxes and general 

sales taxes, 1942 38 

Pyramiding 39 

Exemptions 39 

State tax compendiums — 41 

Alabama --r "^1 

Arizona 42 

Arkansas 42 

California 43 

Colorado 44 

IlUnois 45 

Indiana 46 

Iowa 46 

Kansas 47 

Michigan 48 

Mississippi 49 

Missouri 51 

New Mexico 52 

North Carolina 53 

North Dakota 55 

Ohio 56 

Oklahoma 57 

South Dakota 58 

Utah 60 

Washington 61 

West Virginia 61 

Wyoming 63 

Part IV. Proposed manufacturers' excise tax revenue bill of 1932, and 

Ways and Means Committee report 65 

A. Bill 67 

B. Report • •- 78 

General statement 78 

Detailed report 79 



CONTENTS V 

Page 

Part V. Foreign sales tax data 93 

British purchase tax 95 

Revenue from 95 

Persons taxable 95 

Tax base 96 

Classification of goods for the purpose of rate or exemption. _ 98 

Wholesale price, determination 103 

Computation of tax 103 

Canadian manufacturers' sales tax 105 

Revenue 105 

Earlj' forms, pyramiding 105 

Present form, base 106 

Exemptions 106 

Administration 107 

Licenses 107 

Returns 107 

Payment 107 

Australian sales tax 108 

Basis of tax 108 

Sale value 108 

Exemptions , 108 

Administration 108 

Registration 108 

Returns 109 

Collection 109 

Revenue 109 

Incidence 109 

Philippine sales tax 110 

French turn-over tax 111 

Appendix l 123 

British purchase tax 123 

Statutory rules and orders relating to British purchase tax 136 

Registration for British purchase-tax purposes 139 



Part I 

ESTIMATES OF SALES TAX BASES 

A. RETAIL TAX BASE 

B. GENERAL MANUFACTURERS' EXCISE TAX BASE 



A. ESTIMATE OF RETAIL TAX BASE 

[Billions of dollars] 





Calendar years— 




1939 


1941 


1942 


Sales of retail stores _- 


42.0 
3.4 
1.6 


63.6 
4.0 
2.0 


52.4 


Add: Retail sales of manufacturers, wholesalers, hotels, farmers, etc.' 


3.5 


Less: Receipts for services and sales to other retailers 


1 8 






Omninndit.y salps ^t retail 


43.8 


55.6 


54 1 






Retail value of commodities now subject to manufacturers' and retailers' 
excise taxes^ 


17.5 
26.3 


22.4 
33.2 


17.3 


Commodity sales excluding those now taxed _ 


36.8 






Food sales: 

For home consumption _.. _ ._ 


10.2 

2.2 

6.3 

.3 


12.4 

2.7 

7.9 

.4 


14.3 


Restaurant meals, etc . . 


3.1 


Apparel and piece goods (excluding furs) 


7 5 


Medicines- -- _ .._ .._ 


.5 







Federal, State and local purchasers from retaD stores are relatively negligible and for this reason have not 
been deducted from this base. 

1 See the following table: 

[In billions of dollars] 

Calendar year 194^ 

Manufactures 1.0 

Hotels ^ .4 

Farmers .4 

Wholesalers 1.2 

Building contractors ] 

Service establishments I , 

Dining-car sales ( '^ 

Sales of Government cafeterias J 

Total ^ 3.5 

^ See the following table: 

Retail value of commodities now subject to manufacturers' and retailers' excise taxes 
[Billions of dollars] 



Alcoholic beverages: 

For on-premises consumption 

For off-premises consumption 

Tobacco 

Gasoline 

Automobiles, trucks, parts, etc 

Jewelry, furs, and toilet preparations* 
All other 

Total - 



Calendar years 



1.4 
2.4 
1.9 
2.9 
3.5 



2.9 
2.1 
3.4 
5.2 
1.1 
6.0 



22.4 



2.1 
3.4 
2.4 
2.9 
2.0 
1.3 
3.2 



17.3 



Figures for 1939 are based on Census of Manufactures and Census of Retail Trade, Bureau of the 
Census, except for alcoholic beverages. For the latter group estimates are based on a study made by 
the Distilled Spirits Institute. Change from 1939 to 1941 estimated by the Bureau of Foreign and 
Domestic Commerce based on changes in the value of production and of changes in retail sales. 

For 1942 the estimates allow for expected price increases and curtailment in production of certain 
durable goods, rubber tires and tubes, gasoline, etc. 

♦Jewelry, 0.5; furs, 0.4; and toilet preparations, 0.4. 

Source: Division of Research and Statistics, Bureau of Foreign and Domestic Commerce. 



SALES-TAX DATA 



B. ESTIMATE OF GENERAL MANUFACTURERS' EXCISE TAX BASE 

[lu billions of dollar.*] 





Calendar years 




1939 


1941 


1942 


Gross value of manufactured products.. 


56.8 


90.0 


115.0 


Net value of products... .. 


39.8 
2.5 


6.3.0 
3.9 


80.5 


Deduct: Exports of semifinished and finished manufactures 


3.0 






Calculated net value of manufacturing output available for domestic con- 
sumption 


37.3 


59.1 


77. & 






Deduct: 

Net value of items to be exempted from excise taxes — foods, clothing, and 
medicines available for domestic use ' - 


11.1 
9.1 


14.8 
11.7 


18.7 


Value of products now taxed^ (excluding exports) 


6.6 


Go.vernment expenditures for commodities . 


5.6 


14.3 


3771 






Federal Government . ._ 


3.2 
2.4 


12.0 
2.3 


35 2 


State and local governments 


2.2 


Subtotal: Manufacturers' tax base - . - 


11.5 

.3 
1.1 


18.3 

.3 
1.4 


14.8 


Add: 

Imports of finished manufactures 

Unduplicated value of mineral products, excluding petroleum 


.2 

1.5 






Total tax base 


12.9 


20.0 


16.5 







' Calendar 1942 values are: 

[In billions of dollars] 

Food and Icindred products (excluding alcoholic beverages) 12. 2 

Clothing, including shoes (excluding exports) 6.2 

Medicines (e.xcluding e.xports) .3 

Total 18.7 

3 See the following table (Exports: 1939, 0.6; 1941, 0.7; 1942, 0.5). 

Manufacturers' value of commodities now subject to manufacturers' and retailers' excise tax {includ- 
ing exports) 
[Millions of dollars] 



Commodities 



Distilled spirits 

Wines, cordials, etc 

Fermented malt liquors. 
Cigars. 



Cigarettes 

Snufl" of all descriptions 

Tobacco, chewing and smoking. 

Cigarette papers. and tubes 

Lubricating oils 

Matches 



Gasoline 

Electrical energy _. 

Tires and inner tubes. 

Rubber articles 

Phonograph records. _ 
Musical instruments.. 
Lyggage. 



Electric, gas, and oil appliances 

Electric signs 

Business and store machines 

Washing machines 

Optical equipment and photographic apparatus. 

Electric light bulbs and tubes 

Automobile trucks 

Other automobiles and motorcycles 

Parts and accessories for automobiles 

Radio sets, phonographs, components, etc 

Refrigerators, air conditioners, etc 

Sporting goods 

Firearms, shells, and cartridges 

Pistols and revolvers 

Jewelry 



Furs. 

Toilet preparations. 

Total 



Calendar years 



1939 1941 1942 



1,322 



2,334 



1,481 



304 

30 

1,681 

670 

668 

410 

40 

50 

50 

220 

30 

200 

80 

170 

100 

3,247 

650 

350 

550 

75 

50 

215 
200 
175 



1,573 



238 

32 

885 

77a 

200 

200 

20 

50 

60 

150 

35 

50 

20 

200 

120 

270 

200 

250 

250 

70 

25 

235- 
240 
225 



7,138 



Source: Division of Research and Statistics, Bureau of Foreign and Domestic Commerce. 



Part II 

CONSUMER [INCOMES AND BUSINESS INDICATORS 

A. CONSUMER INCOMES AND EXPENDITURES, 1935 

AND 1941 

B. NATIONAL INCOME AND BUSINESS INDICATORS 



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12 



SALES-TAX DATA 



Tablk 5A. — Average outlay of single individuals for consumption, gift, and per- 
sonal tates, and savings,^ hy income level, 1935-36 



Income level 



Single individuals 



Number Percent 



Average 
income 
per indi- 
vidual 



Average outlay per individual for- 



Current 
consump- 
tion 



Gifts and 

personal 

taxes 3 



Savings 



Under $500 

$50O-$750 

$750-$1,000 

$1,000-$1,250.... 
$1,250-$1,500.... 
$1,500-$1,750.... 
$1,750-$2,000..-- 

$2,000-$2,500 

$2,500-$3,000.... 
$3,000-$4,000-.-. 
$4,000-$5,CK)0.-.. 

$5,000-$10,000-.- 
$10,000-$15,000.. 
$15,000-$20,000.- 
$20,000 and over 

All levels. 



2, 532, 627 
1, 972. 745 
1, 599, 030 

1, 108, 551 
877, 956 
.546, 546 
398, 985 

493, 751 
161, 275 
172, 091 
61, 596 

85, 898 
20, 861 
9,436 
16, 652 



10, 058, 000 



25.2 
19.6 
15.9 

11.0 
8.7 
5.4 
4.0 

4.9 
1.6 
1.7 
.6 

.9 
.2 
.1 
.2 



$300 
623 
873 

1.119 
1,368 
1,617 
1,868 

2,225 
2,703 
3,411 
4,491 

6,827 
11, 999 
17, 052 
43, 884 



.$345 
608 
815 

1,004 
1,180 
1.344 
1.501 

1,714 
1,990 
2,354 
2,842 

3.863 
5.829 
7,719 
14, 671 



32 
62 

93 
124 
156 
187 

232 
291 
380 
523 

823 
1,517 
2,148 
0,642 



-$49 
-17 
-4 

22 
64 
117 
180 

279 

422 

677 

1.126 

2,141 

4,653 

7,185 

22, 571 



100.0 



1,151 



932 



103 



116 



Source: National Resources Committee, Consumer Expenditures, p. 32. 



SALES-TAX DATA 



13 



'Table 5B. — Average outlay of single consumers in the United States for consump- 
tion, gifts, and personal taxes, and savings ^ hy income level, 1941 



Income level 



Under $500 

$500-$750 

$750-$1,000 

$1,000-$1,250 

$1,250-$1,500 

$1,500-$1,750 

$1,750-$2,000 

$2,000-$2,500 

$2,500-$3,000 

$3,00O-$4,000 

$4,000-$5,000 

$5,00O-$10,C00-.- 
$10,000 and over. 

All levels. 



Single consumers 



Number 
(thou- 
sands) 



1,774 
1,628 
1,536 

1,359 

1,225 

822 

538 

791 
417 
397 
196 

176 
91 



10, 950 



Percent 



16.2 
14.9 
14.1 

12.4 
11.2 
7.5 
4.9 

7.2 
3.8 
3.6 

1.8 



Average 
income per 
single con- 
sumer 



$320 
631 
876 

1,125 
1,365 
1,610 
1,830 

2,237 
2,700 
3,380 
4,350 

6,800 
23, 000 



1,538 



Average outlay per single con.<5umer 
for— 



Current 
consump- 
tion 



$369 
618 
822 

1,014 
1,184 
1,350 
1,483 

1,738 
2,010 
2,368 



3,937 
9,967 



1,184 



Gifts and 

personal 

taxes 3 



120 
148 
173 

221 
266 
350 

454 

739 
2,934 



Savings 



-$52 
-17 
-5 

23 
64 
113 
171 

277 

417 

673 

1,087 

2,136 
10, 099 



Source: Research Division, OfiQce of Price Administration, Consumer Income and Demand Section. 



14 



SALES-TAX DATA 



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16 



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SALES-TAX DATA 



17 



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18 



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20 



SALES-TAX DATA 



Table 9A. — Average outlay of American families for consianplion,'^ gifts and personal 
taxes, and savings, by income level, 1985-36 



Income level 



Families 



Number 



Percent 



Average 
income 

per 
family 



Average outlay per family for- 



Current 
consump- 
tion 



Gifts and 

personal 

taxes ^ 



Savings 



Under $500 

$500-$750 

$750-$1.000 

$1,000-$1,250.-. 
$1,250-$1,500... 
$1,500-$1,750... 
$1,750-$2,000.., 

$2,000-$2.500... 
$2,500-$3,000... 
$3,000-14,000--. 
$4,000-$5.000. . . 

$5,000-$10.000. - - 
$10,000-$15,000- - 
$15,000-$20,000. . 
$20,000 and over 

All levels. 



4, 178. 284 

3, 790, 215 

4, 277, 048 

3, 882, 444 
2, 865. 472 
2, 343, 358 

1, 897, 037 

2, 464, 860 
1, 314, 199 
1, 181, 987 

402, 595 

510, 010 
131, 821 

58, 487 
93, 483 



29, 400, 300 



1 1. 2 
12.9 
14. r> 

13.2 
9.8 
8,0 
6.4 

8.4 
4.5 
4.0 
1.4 



100.0 



$312 
627 
874 

1, 120 
1, 364 
1,612 
1,829 

2,221 
2,715 
3,394 
4,391 

6,874 
11,353 
17, 331 
41,871 



1,622 



$466 
707 
914 

1,127 
1,316 
1,512 

1.684 

1, 968 
2,302 
2,729 
3,276 

4,454 
6,097 
9,134 

14. 822 



1,389 



136 
211 

392 

840 

1,282 

5,820 



-$162 
-92 

-58 

-31 
14 
56 
92 

182 
315 
529 
904 

2,028 
4,416 
6,915 
21,229 



164 



Source: National Resources Committee, Consumer Expenditures, p. 20. 



SALES-TAX DATA 



21 



Table 9B. — Average outlay of all families in the United States for consumption 
giftsland]'personal taxes, and savings,'^ by income level, 19^1 ' 



Income level 



Under $500 

$50O-$750 

$750-11,000 

$1,000-$1,250.... 

$1,250-$1,500 

$1,500-$1,750___. 
$l,750-$2,000 

$2,000-$2,500 

$2,500-$3,000.... 
$3,000-$4,000--__ 
$4,00O-$5,000.-__ 

$5,00O-$10,000... 
$10,000 and over 

Alllevels. 



Families 



Number 
(thousands) 



2,315 
2,849 
3,027 

3,333 
3,682 
2.837 
2,260 

3,729 
2,338 
2,530 
1,311 

1,202 
684 



32, 097 



Percent 



7.2 
8.9 
9.4 

10.4 
11.5 
8.8 
7.0 

11.6 
7.3 
7.9 
4.1 

3.8 
2.1 



100.0 



Average 
income 

per 
family 



$337 
631 
876 

1,125 
1,365 
1,610 
1,830 

2,237 
2,700 
3.380 
4,350 

6,800 
23, 424 



2,362 



Average outlay per family for- 



Current 
consump- 
tion 



$507 
714 
919 

1,134 
1,322 

1,517 
1,699 

1,995 
2,312 
2,743 
3,310 

4,476 
10, 110 



1,844 



Gifts and 
personal 

taxes 3 



87 
120 
169 

345 
2,595 



Savings 



-$177 
-93 
-58 

-31 
12 
55 
85 

176 
303 
515 
871 

1,974 
10, 719 



404 



-Source: Research Division, Office of Price Administration, Consumer Economics Section. 



22 



SALES-TAX DATA 



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23 



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24 



SALES-TAX DATA 



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SALES-TAX DATA 



25 



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58: 



a a o c P 



B. NATIONAL INCOME AND BUSINESS INDICATORS 



Table 1. — A^ationnl income by major industrial source for selected years 

I Billions of dollars] 

1942 



Total national income (current dollars) 

Agriculture 

Mining ._- 

Manufacturing 

Contract construction 

Transportation 

Power and gas . 

Communication 

Trade -- 

Finance. 

Government 

Service 

Miscellaneous 



1929 


1932 


1940 


1941 


S3. 3 


39.9 


77.2 


94.5 


6.8 


2.4 


5.3 


7.4 


1.9 


.5 


1.7 


2.1 


20.9 


6.2 


20.1 


27.6 


3.6 


.9 


2.5 


3.7 


7.0 


3.6 


5.4 


6.4 


1.4 


1.1 


1.5 


1.6 


1.0 


.7 


1.0 


1.0 


11.9 


5.6 


11.6 


13.2 


10.1 


5.3 


7.0 


7.5 


6.4 


6.5 


10.2 


11.7 


8.3 


4.7 


7.4 


8.0 


4.0 


2.4 


3.5 


4.3 



112. 



9.3 
2.4 

36.7 
4.0 
7.4 
1.7 
1.2 

12.9 
7.8 

15.5 
8.7 
5.1 



Source: Department of Commerce. 



Table 2.- 



-National income in current and 1935-39 dollars and 'per capita income in 
1936-39 dollars, 1929-41 





National 

income in 

current 

dollars 

(billions) 


National 

income in 

1935-39 

dollars 

(billions) 


Per capita 

income in 

1935-39 

dollars 




National 

income in 

current 

dollars 

(billions) 


National 

income in 

1935-39 

dollars 

(billions) 


Per capita 

income in 

1935-39 

dollars 


1929 


83.3 
68.8 
54.4 
39.9 
42.3 
49.3 
55.7 


68.0 
57.9 
50.9 
41.6 
45.7 
50.5 
56.0 


560 
470 
410 
333 
364 
400 
440 


1936 


64.9 
71.5 
64.1 
70.8 
77.2 
94.5 


65.2 
69.0 
64.1 
71.8 
77.9 
89.1 


509 


1930 


1937 


536 


1931 


1938 


494 


1932 


1939 - 


549 


1933 


1940 


590 


1934 


1941 . . 


669 


1935 











Source: Department of Commerce. 



26 



SALES-TAX DATA 

Table 3. — National income hy distributive shares in selected years 
[Billions of dollars] 



27 





1929 


1932 


1940 


1941 


Total national income (current dollars) 


83.3 


39.9 


77.2 


94.6 




Total compensation of employees .. 


53.0 


31.6 


52.7 


64.8 




Salaries and wages 


52.5 
.5 


31.0 
.6 


49.0 
3.7 


61.2 
3.6 


Total supplements to salaries and wages . 




Work relief wages ' 




.1 


1.6 
1.4 

.7 


1.2 


Social Security contributions of employers 2 




Other labor income ^ 1 . 


.5 


.5 


.8 




Net income of incorporated business 


7.2 


-3.7 


5.5 


7.2 




Dividends to stockholders, net 


5.9 
1.3 


2.7 
-6.4 


4.3 
1.2 


4.6 
2.6 


Business savings . 




Net income of unincorporated business 


13.6 


4.9 


11.5 


14.6 




Agricultural ._ 


5.2 
8.4 


1.5 
3.4 


4.4 
7.1 


6 1 


Other . 


8.5 




Interest, net 


5.9 
3.6 


5.6 
1.5 


5.2 
2.3 


5.3 
2.6 


Net rents and royalties 





1 Includes pay rolls and maintenance of Civilian Conservation Corps enrollees and pay rolls of Civil 
"Works Administration, Federal Emergency Relief Administration, and the Federal Works Program proj- 
ects plus administrative pay rolls outside of Washington, D. C, for all except the Federal Works program 
area oface employees and their pay rolls under the Federal Works program are included with the regular 
Federal Government employment and pay-roll figures. 

2 Includes contributions to railroad retirement and railroad unemployment compensation funds. 

3 Pension payments under private plans and under systems for Government employees, compensation 
for industrial injuries, etc. 

Som'ce: Department of Commerce. 



70095—42- 



28 



SALES-TAX DATA 



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CO o --H »o --^ 00 ui CO o> c4 1^ '«*' o 

++++++ I ++ ' + ++ 



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t^ t^ cd CO oi 
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saijEs-tax data 



29 



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p=< 



Part III 

STATE SALES TAX DATA 



31 



Table 1. — State general sales tax rates 



New Mexico 

North Carolina. 
North Dakota.. 
Ohio 



Percent 
.. 2 
.- 3 
.. 2 
._ 3 



Percent 

Alabama 2 

Arizona 2 

Arkansas 2 

California 3 

Colorado 2 

Illinois 2 

Indiana Q-) 

Iowa 2 

Kansas 2 

Michigan 3 

Mississippi 2 

Missouri 2 

1 One-half of 1 percent (until Jan. 1, 1942, rate was 1 percent). 

From a low rate of one-half of 1 percent in Indiana, and 1 percent in New York 
City and New Orleans, the rate ranges to a high of 3 percent, effective in 5 States. 
While the Indiana rate appears very low, it must be remembered that Indiana has 
a very comprehensive gross income tax on income from almost every source. The 
taxpayer in New Orleans paid 2 percent until the State law with its rate of 1 per- 
cent was allowed to expire. In 1940 this rate was increased to 2 percent and now 
it is 3 percent. The most commonly used rate is the 2 percent rate which is 
effective in 16 sales tax States. 



Oklahoma 2 

South Dakota 2 

Utah 2 

Washington 3 

West Virginia 2 

Wyoming 2 

New York City 1 

New Orleans 3 



Table 2. — State general sales tax collections, fiscal years 194-0 and 1941 
[In millions of dollars] 



State 


Collected 
in 1940 


Collected 
in 1941 


State 


Collected 
in 1940 


Collected 
in 1941 


Alabama 


$7, 756 
4,010 
5,514 
93, 780 
18,810 
(2) 

90, 818 

3 23, 538 

16,858 

10, 080 

7,473 
60, 374 

6,743 
23, 019 


$9, 312 

4,403 

6,152 

110,372 

9,416 


New Mexico 


$4, 198 

n 

12, 208 
3,099 
50, 985 
10, 952 

n 

4,504 
4,199 
20,689 
8 18, 608 
1,961 


$4,265 








Arkansas 


North Carolina 


14,247 


California _-__-_-, 


North Dakota .. .. ... . 


3,364 


Colorado 

Florida 


Ohio 

Oklahoma 

Pennsylvania 

South Dakota . . . 


63, 119 
11,788 


Illinois 


101, 761 
25,873 
17,992 
11, 189 

"«'4,"99i 

73, 632 

7,407 

29, 515 




Indiana 


5,014 


Iowa. 


Utah - 


4,542 


Kansas 

Kentucky. ... 


Washington 

West Virginia 


24,364 
20,874 


Louisiana 


2,296 




Total 






490, 187 


565, 890 


Missouri 







1 Consists of general sales tax, $7,285,000; use tax, $331,000; service tax, $1,193,000. 

2 Collections of the Florida retailers' occupation tax totaling $2,361,000 are shown as "Taxes on specific 
businesses and occupations, chain stores," because it includes a license tax on retailers graduated from $10 
to $400 per store, according to the number of branch stores up to 16 in the chain. The provisions of the 
tax law levying a sales tax at a higher rate on the sale of chain stores was held invalid by State courts. 
Over $2,000,000 of the total collected consists of receipts from the sales tax. 

3 Gross income tax collections levied on sales and services; including gross receipts of public utilities, 
admissions, etc. 

* Collections of repealed excise tax. 

' Repealed. 

' Collections of repealed sales tax delinquent since 1935. 

' Collections of emergency relief sales tax delinquent since repeal. 

8 Inclusive of collections of gross income and gross receipts taxes on public utilities and other businesses. 
General sales tax collections alone totaled $8,759,000, while business and occupation taxes, exclusive of 
production taxes shown in category of "Severance taxes," totaled $9,849,000. 

33 



34 SALES-TAX DATA 

Table 3. — Costs of collection, State general sales and use taxes, 1940 



State 


Adminis- 
trative costs 


Percent of 
receipts 


State 


Adminis- 
trative costs 


Percent of 
receipts 


Arizona 


$161, 300 

170, 300 

2, 558, 000 


4 

3 

2.52 
15 

1.9 

2.5 

2 
13 






1 4 


Arkansas 


North Dakota 


$54, 370 


1 7 


California 


Ohio 


» 3 




Oklahoma 

South Dakota 


3 192, 500 


1 9 


Illinois 


1, 788. 100 
439, 800 
200,100 


2 6 


Indiana 


Utah 

Washington. 


92, 060 
< 445, 060 


2 18 


Iowa - 

Kansas 


U.54 
O 
«3 3 


Louisiana - 


1 400, 000 

1, 052, 540 

27, 010 

480,000 


Wyoming 

All State average 


• 63, 500 




i.74 
4.01 
1.98 




Mississippi 




2 5 


Missouri . 













1 Maximum set by law. 

2 Approximate. 

3 Estimate based on cost of sales tax division plus share of general enforcement division. 
* Includes sales, public utility, liquor, admissions, and use ta.xes. 

» Less than 1 percent. 
I" Includes income tax. 

Source: State Sales and Use Taxes, Taxes, p. 162, March 1942. 

Table 4. — Showing percentage of general sales tax collections, by States, to total 

State collection, fiscal 1941 



[In thousands of dollars] 








State 


Total tax 
collections 
in sales- 
tax States 


General 
sales-tax 
collection 


Percentage 
of general 

sales tax to 
total tax 
collection 


Alabama 


$62,049 
20, 135 
36, 902 

367, 796 
42, 185 

280, 874 

108, 490 
74, 847 
44,977 
84, 731 

229, 369 
36, 376 

106, 546 
18, 519 
99, 533 
16,093 

300, 828 
62, 852 
17,420 
21, 172 
74, 842 
61, 615 
8,857 


$9, 312 

4,403 

6,152 

110, 372 

9,416 

101, 761 

25, 873 

17, 992 

11, 189 

I 4, 991 

73, 632 

7,407 

29, 515 

4,265 

14, 247 

3,364 

63, 119 

11,788 

5,014 

4,542 

24, 364 

20,874 

2,296 


15.0 


Arizona _ _. 


21.9 


Arkansas - 


16.7 


California _ 


30.0 


Colorado- . . 


22.3 


Illinois ... ... 


36.2 


Indiana 


23.8 


Iowa - -_. 


24.0 


Kansas .. ... 


24.9 


Louisiana ..- 


5.9 


Michigan 


32.1 


Mississippi . . 


20.4 


Missouri . __ _ 


27.7 


New Mexico 


23.0 


North Carolina _- 


14.3 


North Dakota ... . ..- .- 


20.9 


Ohio 


21.0 


Oklahoma. .. . 


18.8 


South Dakota _ _.- 


28.8 


Utah 


21.5 


Washington 


32.6 


West Virginia _ 


33.9 


Wyoming 


26.0 






Total 


2, 177, 008 


665, 890 


26.0 







1 Repealed. 



SALES-TAX DATA 

Table 5. — Per capita collection of general sales taxes, fiscal 1941 



35 



state 


Collection 
of general 
sales tax 


Popula- 
tion 


Sales tax 
per capita 


Alabama . 


$9, 312, 000 

4, 403, 000 

6, 152, 000 

110,372,000 

9, 416, 000 

101, 761, 000 

25, 873, 000 

17, 992, 000 

11, 189, 000 
4, 991, 000 

73, 632, 000 
7, 407, 000 

29, 515, 000 
4, 265, 000 

14, 247, 000 

3, 364, 000 
63, 119, 000 
11, 788, 000 

5, 014, 000 

4, 542, 000 
24, 364, 000 
20, 874, 000 

2, 296, 000 


2, 833, 000 
499, 000 

1, 949, 000 

6, 907, 000 
1, 123, 000 

7, 897, 000 
3, 428, 000 

2, 538, 000 

1, 801, 000 

2, 364, 000 
5, 256, 000 
2, 184, 000 

3, 785, 000 
532, 000 

3, 572, 000 

642, 000 
6, 908, 000 
2, 226, 000 

643, 000 
550, 000 

1, 736, 000 

1, 902, 000 

251, 000 


$3.28 


Arizona - - - 


8.82 




3.16 


California - - - - 


15.98 


Colorado - - 


8.38 




12.89 


Indiana - - - - - - 


7.55 


Iowa ■- 


7.09 




6.21 


Louisiana . . - - 


1.90 




14.00 




3.39 


Missouri - _ - 


7.80 




8.02 


North Carolina - - .-.-_. . . 


3.99 




5.24 


Ohio 


9.14 


Oklahoma 


5.30 




7.80 


Utah 


8.26 




14.03 


West Virginia _ - 


10.97 




9.15 






Total - 


565, 890, 000 


61, 526, 000 


9.20 







Collection and population figures rounded. 

COLLECTIONS 

In 1941 the revenue from all State general sales taxes was $565,- 
890,000, an increase of $74,703,000 over fiscal 1940, representing a 
percent change of +15.3. Of all sales taxes collected in 48 States 
and amounting to $1,821,800,000, the collection of general sales taxes 
amounted to 31.06 percent, and to 12.6 percent of total State tax 
collections. 

In the sales tax States the total tax collections were $2,177,008,000. 
Of this total, the general sales taxes were $565,890,000, or 26 percent. 
The general sales tax collection was larger than the $422,700,000 
collected on net incomes, individual and corporate, in all States; 
larger than the $447,700,000 collected on specific businesses in all 
States; and was exceeded by only the motor fuel tax of $914,500,000 
and the unemployment compensation tax of $901,400,000 collected in 
all States, 

The per capita collection for all State sales taxes in 1941 was $13.80. 
In those States with a general sales tax, the per capita general sales 
tax collection was $9.20, with a range from a low of $1.90 per capita 
in Louisiana to a high of $15.98 per capita in California, 

Table 6. — State tax collections, fiscal 1941 



Tax 



Sales taxes of all kinds 

Unemployment compensation 

Taxes on specific business 

Net income taxes 

Motor-vehicle licenses 

Property taxes 

Other taxes 



Total collection 4,498,700,000 



1941 collec- 
tion 



$1,821,800,000 
901, 400. 000 
447, 700, 000 
422, 700. 000 
417,100,000 
257, 000, 000 
230, 600, 000 



Percent 

of total 

collection 



40.5 
20.0 
9.9 
9.4 
9.3 
5.7 
5.2 



100.0 



Source: Department of Commerce, Bureau of the Census. 



36 



SALES-TAX DATA 



Table 7. — State tax collections, fiscal 1941, hy distributions 



Type of tax 


Number 
of States 
reporting 
receipts 
in 1941 


Amount col- 
lected (in 
millions) 


Percent dis- 
tributions 
of collec- 

tions by 
type of tax 


Total collections 


48 
45 
19 

48 

26 
48 
48 
27 
9 
10 
22 

48 

48 

45 
42 
48 
20 
39 
24 
14 
44 

35 

19 
23 
11 

47 

9 

8 

48 

22 

48 


$4, 498. 7 


100 






General and selective property taxes 


257.6 


5 7 






Severance taxes 


58.8 


1 3 






Sales taxes - . 


1, 821. 8 


40 5 






General sales 


565.9 

914.5 

215.5 

107.2 

4.2 

5.5 

8.9 


12 6 


Motor-fuel sales . . 


20 3 


Alcoholic beverages 


4 8 


Tobacco products - . 


2 4 


Soft drinks 


1 


Admissions 


1 


Other commodities 


.2 






Motor- vehicle licenses __ 


417.1 


9 3 






Taxes on specific business . .. 


447.7 


9 9 






Corporations 


101.2 

106.7 

103.6 

6.1 

58.0 

3.6 

19.0 

49.5 


2 2 


Public utilities 


2 4 


Insurance 


2 3 


Chain stores . 


1 


Alcoholic beverages - _ 


1 3 


Amusements, 


1 


Betting 


4 


Othfir businesses, inclliding banks 


1 1 






Net-income taxes 


422.7 


9 4 






On corporations 


163.2 

215.7 

43.8 


3 6 


On individuals, - 


4 8 


Undistributable. 


1 






Inheritance and estate tq^es 


119.2 


2 7 






Gift taxes. 


1.8 


03 






Poll taxes --- - 


4.8 


I 






Hunting and fishing licenses 


22.6 


5 






Docimientary and miscellaneous ... 


23.4 


.5 






Unemployment compensation 


901.4 


20 






Source: Department of Commerce, Bureau of the Census. 









SALES-TAX DATA 



37 



Table S.— Percentage of all States sales taxes to total State taxes, by States, fiscal 

year 1941 



State 



Alabama. _. 

Arizona.- 

Arkansas. 

California 

Colorado 

Connecticut 

Delaware 

Florida 

Georgia 

Idaho 

Illinois 

Indiana 

Iowa 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts.. 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 

Nevada 

New Hampshire 

New Jersey 

New Mexico 

New York 

North Carolina. 
North Dakota.. 

Ohio 

Oklahoma 

Oregon 

Pennsylvania 

Rhode Island 

South Carolina.. 
South Dakota... 

Tennessee 

Texas 

Utah 

Vermont 

Virginia 

Washington 

West Virginia.... 

Wisconsin _. 

Wyoming 

Total 







Percentage 


Total tax 
collections 


All sales taxes 


of sales 

ta.xes to 

total 

taxes 


$62, 049, 000 


$31,261,000 ' 


50.4 


20, 135, 000 


10,998,000 


54.6 


36, 902, 000 


22,181,000 ; 


60.1 


367, 796, 000 


175.251,000 


47.6 


42, 185, 000 


20, 087, 000 


47.6 


72, 266, 000 


19,683,000 : 


27.2 


13, 067, 000 


3,185,000 , 


24.4 


67, 940, 000 


34, 988, 000 


51.5 


59, 922, 000 


31, 859, 000 


. 53.2 


14, 916, 000 


0, 572, 000 


37.4 


280, 874, 000 


156,205,000 . 


5.5.6 


108, 490, 000 


58,117,000 


53.6 


74, 847, 000 


38,817,000 


.51.9 


44, 977. 000 


23,962,000 1 


53.3 


60, 554, 000 


23,684,000 


39.1 


84, 731, 000 


38,564,000 


4.5.5 


25, 365, 000 


7,774,000 


30.6 


62, 147, 000 


20,413,000 ' 


32.8 


171, 090, 000 


39, 123, 000 


22.9 


229, 369, 000 


112,499.000 


49.0 


87, 793, 000 


22, 176, 000 ; 


25.3 


36, 376, 000 


24,693,000 ; 


67.9 


106, 546, 000 


50, 084, 000 


47.0 


14, 922, 000 


6, 170, 000 ! 


41.3 


24, 846, 000 


13, 742, 000 j 


55.3 


4, 865, 000 


1, 753, 000 


36.0 


15, 973, 000 


5,549,000 1 


.34.7 


148, 178, 000 


34,381,000 1 


23.2 


18, 519, 000 


10, 403, 000 


56.2 


618, 697, 000 


137,736,000 


22.3 


99, 533, 000 


46,823,000 


47.0 


16, 093, 000 


8, .597,000 1 


53.4 


300, 828, 000 


155,284,000 : 


51.6 


62, 852, 000 


32,667,000 1 


52.0 


35, 963, 000 


12,768,000 j 


35.5 


357, 921, 000 


95,099,000 1 


26.6 


26, 860, 000 


6,739,000 1 


25.1 


41, 150, 000 


23,606,000 ! 


.57.4 


17, 420, 000 


12,572,000 ' 


72. 2 


55, 247, 000 


27,864,000 


.50.4 


156, 045, 000 


61,345.000 


39.3 


21, 172, 000 


9,277,000 ' 


4.3.8 


12, 391, 000 


4,396,000 


35.5 


67, 427, 000 


26,312,000 


39.0 


74, 842, 000 


47,328,000 


63.2 


61, 615, 000 


33,028,000 : 


53.6 


105, 804, 000 


31,608,000 ' 


29.9 


8,857,000 


5,538.000 1 

1 


62.5 


4,498,658,000 


1,821,761,000 1 


40.5 



38 SALES-TAX DATA 

Table 9. — Per capita State tax collections, fiscal year 1941 



Alabama 

Arizona 

Arkansas 

California 

Colorado 

Connecticut . . 

Delaware 

Florida 

Georgia 

Idabo 

Illinois 

Indiana 

Iowa. 

Kansas 

Kentucky 

Louisiana 

Maine 

Maryland 

Massachusetts 

Michigan 

Minnesota 

Mississippi 

Missouri 

Montana 

Nebraska 



19-11 total 


Per 


collections 


(in millions) 


capita 


$62, 049 


$21. 90 


20,135 


40.32 


36,902 


18.93 


367. 796 


53.24 


42, 185 


37.55 


72,266 


42.27 


13, 067 


49.03 


67,940 


35.56 


59,922 


19.18 


14, 916 


28.41 


280, 874 


35.56 


108,490 


31.65 


74, 847 


29.48 


44, 977 


24.97 


60,554 


21.27 


84, 731 


35.19 


25, 365 


29.93 


62, 147 


34.12 


171,090 


39.63 


229, 369 


43.63 


87, 793 


31.44 


36, 376 


16.65 


106, 546 


28.15 


14, 922 


26.67 


24,846 


18.88 



Nevada., , 

New Hampshire 

New Jersey 

New Mexico 

New York 

North Carolina 

North Dakota 

Ohio... 

Oklahoma 

Oregon.. 

Pennsylvania 

Rhode Island 

South Carolina 

South Dakota 

Tennessee 

Texas 

Utah... 

Vermont 

Virginia 

Washington 

West Virginia 

Wisconsin 

Wyoming 

Total State collection. 



1941 total 
collections 
(in millions) 



$4, 865 
15, 973 

148, 178 
18, 519 

618, 697 
99, 533 
16, 093 

300. 828 
62, 852 
35,963 

357, 921 
26,860 
41. 150 
17,420 
55.247 

156, 045 
21. 172 
12. 391 
67.427 
74. 842 
61, 615 

105, 804 
8,857 



4, 498, 658 



Per 
capita 



$44.12 
32.49 
35.61 
34.82 
46.90 
27.86 
25.06 
43.66 
26.90 
33.00 
30.16 
37.66 
21.66 
27.09 
18.94 
24.32 
38.47 
34.49 
26.18 
43.10 
32.65 
33.72 
36.32 



34.61 



T.\BLE 10. — States imposing both income taxes and general sales taxes, 1942 



Alabama. 

Arizona. 

Arkansas. 

California. 

Colorado. 

Iowa. 

Kansas. 

Louisiana (New Orleans, sales tax). 

Mississippi. 

Missouri. 



New Mexico. 

New York (New York City, sales tax). 
North Carolina. 
North Dakota. 
Oklahoma. 
South Dakota. 
Utah. 
Wyoming, 

West Virginia and Indiana have gross 
receipts tax. 



STATE SALES TAX 

PYRAMIDING 

Sales taxes are usually inteDded to be single turn-over taxes in 
that each article is to be taxed only once. The statutes usually 
provide that the tax does not apply if the property transferred is to 
be resold by the purchaser, A common type of provision is found in 
the Illinois ^ statute that — 

■ "Sale at retail" shall be construed to include any transfer of the ownership of, 
or title to, tangible personal property to a purchaser, for use or consumption by 
any other person to whom such purchaser may transfer the tangible pers^onal 
property without a valuable consideration * * * 

One of the problems arising under the sale for resale provisions 
pertains to the taxation of sales when the property purchased is to 
be used or consumed in manufacturing, processing, and so forth. The 
general rule is that sales of raw materials to be incorporated into a 
finished product destined for ultimate sale to the consumer are not 
taxed, but sales of tools, coal, and so forth, which are used or consumed 
in the process of manufacture, although not incorporated into the 
product to be sold, are taxable.. A few States, including Ohio and 
Michigan, have specifically exempted all or some of such sales of tools 
and equipment, but it appears that the exemption depends entirely 
upon the statute. 

A system of licensing manufacturers is in use in Canada which 
provides that a tax is payable only when a licensee sells to an unli- 
censed buyer. The Canadian system appears to have attained a 
great measure of success in the prevention of pyramiding. 

EXEMPTIONS • 

There is a wide range in both number and type of exemptions allowed 
by the States in their sales taxes. The range extends from Illinois, 
with the tax on aU retail sales of tangible personal property with no 
exemptions except those necessary under the Constitution, to Alabama 
and California, whose statutes provide so many exemptions that the 
tax becomes in effect one on selected sales. 

Three exemptions are found in practically all States and the}- are 
(1) casual sales, (2) sales to the Federal Govenmient, and (3) sales m 
interstate commerce. We need not be concerned with sales in inter- 
state commerce when considering the Federal sales tax, but casual 
sales and sales to the Federal Goveriunent have their place in this field. 

Only two States, Cahfornia and Ohio, and New York City exempt 
food except that sold in restaurants. A few States, while not having a 
complete exemption of food as such, do exempt a limited list of food 
and food in certain educational cafeterias. For instance, in North 
Carolina, the tax does not apply to flour, meal, lard, milk, molasses, 

1 Illinois Revised Statutes, ch. 120, sec. 440. 

39 



40 SALES-TAX DATA 

salt, sugar, coffee, bread, and rolls. The majority of sales-tax States, 
however, make no exemption for foods, and in no case does any State 
make exemption for food sold in restaurants. 

Farm products sold by the farmer to the consumer are exempted in 
several States. In Alabama, Arizona, Arkansas, Louisiana, Mis- 
sissippi, New Mexico, and North Carolina, the exemption is by express 
provision of law, while Utah provides the exemption by regulation. 
In Arkansas such products are exempt only if they are sold on the 
farm by the producer or grower. In South Dakota and West Vir- 
ginia, they are exempt only if the sales are casual. Livestock, fer- 
tilizer, feed, and seeds sold to farmers are found among exemptions 
in many of the States. 

Most States exempt sales to religious and charitable institutions 
while in a few no mention is made of such exemptions. 

From considerations of revenue and because of administrative diffi- 
culties involved under a long list of tax-free articles, most of the sales- 
tax States have declined to enact statutes with extensive exemptions, 
preferring to use the tax for its primary purpose — to raise revenue. 

It is important to note the cost of administering the sales tax in 
those States with few exemptions. In Mississippi, for instance, where 
a long list of exemptions apply, the cost of administering the tax was 
4 percent of the receipts, while in Illinois, with no exemptions except 
those made necessary by the Constitution, the administration cost 
was only L9 percent of the receipts. 



SALES TAX COMPENDIUMS^ 

Alabama 
geoss receipts (sales) tax 

Taxable. — A license tax, based on gross sales or gross receipts, is 
imposed on retailers of tangible personal property, operators of places 
of amusement and entertainment, and automobile dealers. 

Exemptions. — Receipts from the following are exempt: 

(1) Nontaxable by Federal or State constitutional restrictions. 

(2) Sales to State, or counties and cities within the State. 

(3) Farm products and livestock. 

(4) Fertilizers. 

(5) School textbooks. 

(6) Gasoline, lubricating oils, cigars, cigarettes, alcoholic beveragea 
utility service on which excise tax is paid. 

(7) Seeds for planting purposes. 

(8) Newsprint paper, newspapers, and religious pubHcations. 

(9) Containers and bagging for agricultural products, 

(10) Coal and coke used in manufacturing of byproducts or other 
products. 

(11) Railroad rails, cars, and barges of more than 50 tons. 

(12) Used automobiles. 

(13) Machines used in mining, quarrying, and manufacturing. 

(14) Fuels and supplies used or consumed aboard ships on the high 
seas. 

(15) Fluid milk except when sold by hotels, restaurants, and retail 
establishments. 

Rates. — ^Receipts from sale of automobiles, one-half of 1 percent; 
receipts from all other taxable sales, 2 percent. 

Collection in 1940.— $7,7 5Q, 000. 

Collection in 1941.— $9,312,000. 

Collection. — Tax to be added to the sales price and collected by 
vendor from vendee. Tokens may be issued by the Department of 
Revenue. Remittance to accompany monthly or quarterly report. 

USE TAX 

Taxable. — An excise tax is imposed on the storage, use, or consump- 
tion of tangible personal property or any automobile vehicle. 

Exemptions. — The storage, use, or consumption of the following 
tangible property is exempt: 

(1) Property subject to the sales tax. 

(2) Nontaxable by Federal or State constitutional restrictions. 

(3) Used by nonresidents while temporarily in State. 

(4) Sold to State, counties, or municipalities. 

1 Compiled from State laws and tax ssrvioes; 

41 



42 SALES-TAX DATA 

(5) Lubricating oil, gasoline, alcoholic beverages, utility services 
on which excise tax is paid. 

(6) School textbooks. 

(7) Farm products, fertilizers, and seeds for planting purposes. 

(8) Containers and bagging for agricultural products. 

(9) Newsprint paper, newspapers, and religious publications. 

(10) Coal and coke used in manufacturing of byproducts or other 
products. 

(11) Railroad rails, cars, and barges of more than 50 tons. 

(12) Machinery used in mining, quarrying, and manufacturing. 

(13) Used automobiles. 

(14) Fluid milk. 

(15) Fuel and supplies used aboard ships on the high seas. 

Rates. — Two percent of sales price, except automotive vehicles 
which are taxed at one-half of 1 percent of sales price. 

Collection in 1940. — (Included in amount given for sales-tax collec- 
tion above.) 

Collection.- — ^Primary liability to collect tax is on the vendor, how- 
ever vendees are liable for the tax if the vendor does not collect it. 
Tax remittances to accompany reports. 

Aeizona 

occupational gross income tax 

Taxable. — Every person engaged or continuing in business within 
the State of Arizona pays a tax based on gross income. 
Exem.ptions. — ^Income from the following are exempted: 

(1) Motor fuel on which excise tax has been paid. 

(2) Common or contract carriers of persons or property. 

(3) Transactions nontaxable by United States law and State con- 
stitution. , 

Rate. — Two percent of the gross income from retail sales. 

Collection in i^^O.— $4,010,000. 

Collection in 1941. —$4:, 403, 000. 

Collection. — ^Taxpayers report to State tax commissioner on or 
before the 15th of each month and within 30 days after the end of 
each year. Tax remittance to accompany report. 

Arkansas 

gross receipts (sales) tax 

Taxable. — ^An excise tax is imposed upon the gross proceeds or gross 
receipts derived from all sales of — ■ 

(1) Tangible personal property. 

(2) Natural or artificial gas, electricity, water, ice, steam, or other 
utility service. 

(3) Telephone and telegraph service. 

(4) Printing. 

(5) Admissions to places of amusement and entertainment. 
Exemptions. — Sales of the following are exempt: 

(1) Intoxicating beverages. 

(2) Cigarettes. 



SALES-TAX DATA 43 

(3) Sales by churches. 

(4) Sales by charitable organizations. 

(5) Sales of food in school cafeterias. 

(6) Newspapers. 

(7) Sales to United States Government. 

(8) Gasoline or motor fuel. 

(9) Sales for resale or for use in manufacturing and processing. 

(10) Advertising. 

(11) Admissions to State, county, or township fairs. 

(12) Sales nontaxable by United States or State constitutional 
restrictions. 

(13) Isolated sales. 

(14) Cotton or cottonseed, raw products of farms, livestock, and 
dairy products. 

(15) Foodstuffs for free distribution to the poor. 

(16) Sales to charitable hospitals and sanitaria. 

(17) Sales of second-hand property. 

(18) Unprocessed crude oil 

Rate. — 2 percent of gross proceeds or gross receipts. 

Collection in ^540.— $5,514,000. 

Collection in 1941.— $Q,152,000. 

Collection. — The tax is paid to the Commissioner of Revenue by the 
seller at the time the report is filed. Tokens may be issued. The 
taxpayer is allowed a 2 percent discount for prompt payment of the 
tax. 

California 

occupational retail sales tax 

Taxable. — Retailers pay a tax for the privilege of selling at retail, 
based on the gross receipts from all retail sales of tangible property, 
in.cluding those affected by exchange, lease, rental, and those in which 
the title is retair).ed by the vendor for security. 

Exemptions. — Receipts from the following sales are exempt: 

(1) Nontaxable by prohibitions in United States or State consti- 
tutions. 

(2) Gas, electricity, and water. 

(3) Gold bullion. 

(4) Property used for public work in the performance of contracts 
made prior to August 1, 1935. 

(5) Food products. 

(6) Property sold prior to July 1, 1939, to the United States or any 
agency except a corporate agency. 

(7) Motor-vehicle fuel. 

(8) Ships of more than 1,000 tons' burden. 

(9) Aircraft and aircraft parts sold to United States for defense 
purposes. 

(10) Tangible personal property sold to the United States or any 
agency or instrumentality thereof except a corporate agency or instru- 
mentality. 

(11) Silver bullion sold by producers or refiners. 

(12) Livestock and poultry. 

70095—42 4 



44 SALES-TAX DATA 

(13) Transfers of publications by publishers or subsequent dis- 
tributors if issued at not less than montlily intervals. 

Rates. — ^Three percent of gross receipts. Retailers' license fee is $1, 

Collection in 1940.— $93,780,000. 

Collection in 1941.— $110,372,000. 

Collection. — Tax remittance to accompany quarterly report. It is 
unlawful for a retailer to represent that he will assume or absorb the 
tax or that it will be refunded. 

USE TAX 

Taxable. — Every person pays a tax on the storage, use, or other 
consumption of tangible property in California purchased from a 
retailer. 

Exemptions. — 

(1) Property on which the sales tax has been paid. 

(2) Nontaxable by the Constitution or laws of the United States 
or California. 

(3) Gas, electricity, and water. 

(4) Gold bullion. 

(5) Property used for the performance of a contract on public 
works executed before August 1, 1933. 

(6) Motor vehicle fuel. 

(7) Food products. 

(8) Newsprint. 

(9) Ships of more than 1,000 tons burden. 

(10) Property of San Francisco Bay Exposition and exhibitors. 

(11) Livestock and poultry. 

(12) Transfers of publications by publishers or subsequent dis- 
tributors if issued at not less than monthly intervals. 

Rate. — ^Three percent of sale price. 

Collection in 1940. — Included in collection above for occupational 
retail sales tax. 

Collection. — Persons storing, using, or consuming tangible personal 
property pay tax to the retailer or to the State board of equalization 
at the time of filing the required quarterly report. 

Colorado 

retail sales tax 

Taxable. — Gross receipts from: 

(1) All retail sales of tangible personal property. 

(2) Intrastate telephone and telegraph. 

(3) Gas and electric service to consumers, whether furnished by 
municipal or private corporations. 

(4) Meals and cover charges furnished at any place where meals 
are regularly served to the public. 

In case of sales on credit, contracts for sale providing for installment 
payment and title to pass in the future, chattel mortgages, or condi- 
tional sales, the tax is to be paid upon each payment as received on 
account of the purchase price. 

Exemptions. — The following sales are exempt: 

(1) Commodities on which there is a Federal or State excise or sales 
tax exceeding 12)^ percent. 



SALES-TAX DATA 45 

(2) To United States- Government, Colorado, or any of its political 
subdivisions. 

(3) To religious, charitable, or eleemosynary corporations. 

^ (4) Nontaxable by prohibition of United States or Colorado law. 

Rates. — ^Two percent of the purchase price excluding the market 
value of exchanged property if such property is to be sold later and 
2 percent of the gross receipts from services. Retailers' annual license 
fee is $2. 

Collection in ^5^0.— $8,810,000. 

Collection in i^^i.— $9,416,000. 

Collection. — Tax remittance to accompany monthly report. Re- 
tailers are to add the tax to the purchase price, and it is unlawful for 
any retailer to represent that he will assume or absorb the tax. 

USE TAX 

Taxable. — An excise tax is imposed on the storage, use, or consump- 
tion of tangible personal property. 
Exemptions. — The storage, use, or consumption of: 

(1) Tangible personal property the sale of which is subject to the 
retail sale tax. 

(2) Tangible personal property purchased for resale. 

(3) Motor vehicle fuel on which the motor fuel tax of 1933 has been 
paid. 

(4) Tangible personal property brought into the State by a non- 
resident for his own storage, use, or consumption while temporarily 
in the State. 

(5) Tangible personal property on which a Federal or State excise 
tax exceeding 12}^ percent has been levied or stored, used or consumed 
by the United States, the State of Colorado, or its institutions, or its 
political subdivisions in their governmental capacities only, or by 
religious or charitable corporations in the conduct of their regular 
religious or charitable functions. 

(6) Tangible personal property of a person engaged in manufactur- 
ing, compounding for sale, profit, or use, which enters into and becomes 
a component part of the product, and the container and label. 

(7) Electricity, coal, coke, fuel oil, or gas for use in processing, 
manufacturing, mining, refining, irrigation, building construction, 
telegraph, telephone, and radio communication, street and railroad 
transportation services, and all industrial uses. 

Rate. — Two percent of the purchase price. 

Collection in 1940. — Included above in retail sales tax collection. 
Collection. — ^Tax remittances to accompany reports when the 
retailer has not collected the tax and issued a receipt therefor. 

Illinois 
occupational retail sales tax 

Taxable. — Persons engaged in the business of selling tangible per- 
sonal property at retail are taxed on their gross receipts from such 
sales made in the course of business. Transactions where possession 
passes but title is retained for security purposes are sales. 

Exemptions. — 

(1) Sales protected by the Federal Constitution. 



46 SALES-TAX DATA 

(2) Isolated or occasional sales by persons other than retailers. 

Rate. — Two percent of 98 percent of the gross receipts from sales 
after June 30, 1941; prior to June 30, 1941, the tax was 3 percent of 
the gross receipts. 

Collection in i^^O.— $90,818,000. 

Collection in 1941.-^101,761,000. 

Collection. — Tax to be paid to the department of finance at the 
time of making the montlily report. 

Indiana 
gross income tax 

Taxable. — Gross income of all residents of Indiana and gross income 
of all persons or corporations doing business in Indiana derived from 
sources within the State are subject to tax. 

Deductions. — 

(1) $3,000 for retail merchants, $1,000 for all other taxpayers. 

(2) Income from interstate and foreign commerce, salaries, pensions, 
and interest from United States Government, to the extent State 
taxation is prohibited by United States Constitution. 

(3) State or Federal taxes collected by agent. 

(4) Income from sales to United States Government nontaxable 
under United States law. 

(5) Amounts paid under insurance policies or contracts, annuities, 
or endowments. 

Exceptions. — 

(1) Insurance companies paying a State tax of more than 1 percent 
on premiums. 

(2) Companies, organizations, and corporations not organized for 
profit. 

Bates. — The percentage used for computing tax depends on the 
source of the income as indicated: Display advertising, one-fourth of 
1 percent; wholesalers and jobbers, one-fourth of 1 percent; retailers, 
one-half of 1 percent; public utilities, 1 percent; banks, etc., 1 percent; 
all other income, 1 percent. 

Collection in 1940.— $23,538,000. 

Collection, in 1941.— $25,873,000. 

Collections. — Tax remittance must accompany required reports. 
Taxpayers report on or before the 15th of April, July. 

lowA 

RETAIL SALES TAX 

Taxable. — Gross receipts from all sales, transfers, or exchanges, of — 

(1) Tangible personal property, consisting of goods, wares, or 
merchandise sold at retail in Iowa to consumers or users. 

(2) Furnishing or service of gas, electricity, water and communica- 
tion sei-vice, including those made by any municipal corporation in its 
proprietary capacity. 

(3) Tickets or admissions to places of amusement and athletic 
events. 



SALES-TAX DATA 



47 



Exemptions. — Gross receipts from sales of — 

(1) Property the State is prohibited from taxing under constitution 
Jaws ot L nited States or under the constitution or laws of this State 

(2) Furnishing or service of transportation service. 

(3) Tangible personal property- used for the performance of a 
contract on public works executed prior to March 9, 1934. 

(4) Admission to State, county, and local fairs, and gross receipts 
from religious, educational, or charitable activities. 

(5) Property accepted as part consideration in the sale in Iowa of 
other property not m excess of the original trade-in valuation. 

(6) Conmiercial fertilizer or agricultural limestone. 

(7) Electricity or steam used in processing tangible personal 
property ultimately sold at retail. 

Rates.— T^^'o percent of gross receipts. RetaHers' permit fee is 
50 cents; the fee is $1 if permit has been previously revoked 

Oollection in 1940.— $16,858,000. 

Collection in 1941. —$17,992,000. 

Collection. — Tax payment to accompany quarterly reports. Re- 
tailers shall, as far as is practicable, include its tax in the sale price, 
and it IS unlawful for a retailer to represent that he is absorbing 
ijue tax. 



USE TAX 



Taxable.— An excise tax is levied on the use of tangible personal 
property purchased on or after April 15, 1937. 
Exemptions. — 
ill P^0P<?rty subject to the sales tax except new motor vehicles. 

(2) Property used in intrastate commerce. 

(3) Property already subject to a special tax. 

(4) Property brought into the State by nonresidents for their use 
while ^athin the State. 

(5) Property not readily obtained in Iowa and used in operating a 
street railway. 

(6) Property exempt under the sales tax. 

Rate. — 2 percent of the purchase price of the property. 
Collection in i^^O.— Included in collections of retail sales tax given 
above. 

Collettion.— The tax is added to the price of the property and col- 
lected by the retailer who remits it to the State Tax Commission at 
the time returns are required to be filed. 

Kansas 
sales tax 

Taxable.— A tax is levied upon the gross receipts from retail sales: 

(1) Tangible personal property. 

(2) Telephone and telegraph service. 

(3) Furnishing gas, water, electricitv and heat. 

(4) Sale of meals or drinks at pubhc places. 

(5) Sale of admissions to any place of amusement. 
Exemptions. — • 

(1) Power, fuel and lubricants used in taxable services. 

(2) Casual or isolated sales. 



48 SALES-TAX DATA 

(3) Sales to manufactiirors, producers, or compounders. 

(4) Sales of livestock, feed, seed or seedlings. 

(5) Sale of like services. 

(6) Admissions to State, county, district and local fairs. 

(7) Sales of property used for State, county, municipal, educational, 
religious or charitable purposes. 

(8) Commodities bearing a State excise tax. 

(9) Sales to State, etc. 

(10) Constitutional exemptions. 

(11) Property used in the performance of a public work's contract, 
title to which passes to a political subdvision upon completion. 

(12) Amount allowed for a trade-in of property. 

Rate. — Two percent of the gross receipts from retail sales of tangible 
personal property or from the furnishing of taxable services. 

Collection in iP^O.— $10,080,000. 

Collection in i^^i.— $11,189,000. 

Collection. — Tax payment to accompany monthly report. The tax 
is collected by the retailer from the consumer and it is unlawful for 
a retailer to represent that he is absorbing the tax. 

COMPENSATING TAX 

Taxable. — An excise tax is levied for the privilege of using within the 
State any article of tangible property which is purchased. 
Exemptions — 

(1) Articles brought in by nonresidents for a period not to exceed 
60 days. 

(2) Property purchased other than at retail. 

(3) Articles already subject to a tax. 

(4) Purchases less than $20 a month. 

(5) Articles not subject to the sales tax. 

Rate. — Two percent of the purchase price paid by the taxpayer. 
Collection in 1940. — Included above in collection of sales tax. 
Collection. — The tax is payable to the State commission of revenue 
and taxation at the time return is made. 

Michigan 

occupation retail sales tax 

Taxable. — Every retailer pays tax for the privilege of carrying on a 
retail business, based on the gross proceeds from — 

(1) Retail sales in the ordinary course of business in Michigan, 
including those in which title is retained for security purposes. 

(2) Sales of electricity and gas for heat and light when made to 
consumer. 

Exemptions. — • i 

(1) $50 of gross sales of each taxpayer per month. 

(2) Sales to United States Government or State of Michigan. 

(3) Sales to charitable, religious or educational institutions not 
operated for profit. 

(4) Commercial advertising produced upon special order. 

(5) Vessels designed for commercial use of 1,000 tons or over. 
Sales for consumption or use in industrial processing or agricultural 

producing not included in "retail sales." In case of trade-ins, the 



SALES-TAX DATA 49 

taxpayer is liable for a tax based on the resale price less the credit 
allowed on account of any trade-in of property of like kind and nature. 

Bates. — Three percent of gross receipts from retail sales; retailers' 
license fee is $1. 

Collection in i^^O.— $60,374,000. 

Collection in i^^^.— $73,632,000. 

Collection.- — Tax payment to accompany reports. The retailer is 
to reimburse himself and it is unlawful for him to represent that the 
tax does not constitute part of the sale price. 

USE TAX 

Taxable. — A tax is imposed on the privilege of using, storing, or con- 
suming tangible personal property in the State based on the price of 
the property so used. 

Exemptions. — Use of the following: 

(1) Subject to sales tdx. 

(2) Tax on which is prohibited by the State or United States Con- 
stitution. 

(3) Purchased from one not engaged in the business of selling 
tangible personal property. 

(4) Property not purchased at retail sale. 

. (5) Used by nonresidents while temporarily in State. 

(6) Already subjected to a State or Federal sales tax equal or in 
excess of 3 percent with a partial exemption equivalent to the lesser 
amounts paid. 

(7) Used in industrial or agricultural processing. 

(8) Commercial advertising produced upon special order. 

(9) Sold to United States or State of Michigan. 

(10) Sold to religious, charitable, or educational institutions. 

(11) Ten dollars of property purchased outside the State per 
month. 

Bate. — Three percent of purchase price. 

Collection in 1940. — Included above in collection of occupational 
retail sales tax. 

Collection. — Tax remittance to accompany monthly reports. 

Mississippi 

occupational sales tax 

Taxable. — A tax is imposed on the privilege of doing business based 
on the gross proceeds from sales of such businesses subject to the 
following, deductions: 

(1) Proceeds from sales to United States or Mississippi, and trans- 
portation of materials for building public roads. 

(2) Nontaxable by prohibitions in State constitution and United 
States law. 

(3) Sums received as taxes on tobacco, gasoline, and oils. 
. Exemptions.- — ■ 

(1) Insurance companies paying the State tax on premiums and 
persons paying sea-foods and amusement tax. 

(2) Building and loan associations. State and national banks, mutual 
savings banks, not having a capital stock represented by shares which 
are operated for benefit of their depositors. 



50 SALES-TAX DATA 

(3) Nonprofit labor, agricultural and horticultural organizations. 

(4) Fraternal benefit or lodge organizations. 

(5) Charitable, religious, or educational organizations. 

(6) Cemetery associations. 

(7) Business, civic, or welfare nonprofit leagues or organizations. 

(8) Hospitals; infirmaries and sanitaria. 

(9) Proceeds from cotton or cottonseed. 

(10) Amounts received under insurance contracts upon death of 
insured or cash surrender or under annuities. 

(11) Sales to schools or of school books. 

(12) Fertilizers, seeds; boxes and crates used in preparing agricul- 
tural products for market. 

(13) Farm or garden products. 

(14) Sales made by persons packing, canning, bottling, or picking 
fruit, farm, and garden products. 

(15) Proceeds of retail dealers in mules, horses, and other livestock. 

(16) Cooperative nonprofit organizations distributing electrical cur- 
rent. 

(17) All commodities in transit or stored at ports of entry intended 
for export or import and all freight shipments of commercial fertilizer 
moving at intrastate rates within the State. 

Rates. — 

Rates 
Subject to tax: Percent 

Automobile dealers or agents 1 

Retailers of tangible property 2 

Wholesalers of tangible property 0. 125 

Jobbers . 125 

Oil 2 

Natural gas 2}^ 

Limestone, sand, gravel, and other minerals 2 

Manufacturers of brick, building tile, cement, and cement products 

and clay products 1 

Manufacturers of drain tile and sewer pipe . 25 

Manufacturers of soft drinks 1 

Ice factories . 25 

Cottonseed oil mills . 25 

Manufacturers of feed and feed stuffs . 125 

Manufacturers not otherwise specifically taxed . 25 

Pasteurized or fluid milk 1 

Water or public sewerage system 2 

Street railways 2 

Furnishing electricity or gas ; for industrial purposes 1 

Other purposes 2 

Telegraph or telephone 2. 

Railroads, sleeping and palace car, intrastate business 2 . 

Express transportation, intrastate 2 

Pipe-line transportation, intrastate 2 

Motor-vehicle transportation, intrastate regular routes 2 

Contractors 1 

Any other business subject to privilege tax law not listed above 2 

Collection in 1940.— $Q, 7 43, 000. 

Collection in 1941. —$7,407, 000. 

Collection. — Tax remittance to accompany required reports. Tax- 
payers add the tax to the sale price and collect it from purchasers; 
tax tokens are issued by the State tax commission to facilitate this 
collection. 



SALES-TAX DATA 51 

USE (COMPENSATING) TAX 

Taxable. — A tax is levied for the privilege of using, storing, or con- 
suming in Mississippi any article of tangible personal property pur- 
chased at retail or produced or manufactured for commercial use, or 
rental or dyed or cleaned or laundered or processed on or after April 
1, 1938. 

Exemptions.— The use of: 

(1) Articles by nonresidents while temporarily in the State. 

(2) Articles the sale of which has akeady been subject to the gross 
sales tax. 

(3) Articles sold at retail which have been specifically exempt from 
the gross sales tax. 

(4) Property owned or used by any person in furtherance of inter- 
state commerce. 

(5) Property purchased, the total of which does not exceed $50 per 
month or in the aggregate does not exceed $300 per year. 

(6) Articles for household purposes. 

(7) Property owned by cooperative nonprofit associations distribut- 
ing electrical current. 

Rates. — The tax is levied in an amount equal to the purchase price 
or rental, dyeing, cleaning, or processing price or service charge of the 
article paid by the taxpayer, multiplied by the following rates: 

Rates 

Subject to tax: - Percent 

Retailers of tangible property 2 

Wholesalers of tangible property . 125 

Jobbers . 125 

Automobile dealers or agents 1 

Pasteurized milk 1 

Any other business, trade, or profession subject to the privilege-tax law 

not listed above 2 

Collection in 194-0. — (Included above in Collection of Occupational 
Sales Tax.) 

Collection. — Remittance to accompany monthly report. 

Missouri 

retail sales tax 

Taxable. — A tax based on gross receipts, is levied on sales of the 
following (including lease or rental consideration where the right to 
continuous possession or use of any article of tangible personal prop- 
erty would be taxable if an outright sale): 

(1) Tangible personal property. 

(2) Admission to places of amusement, entertainment, recreation, 
games, and athletic events. 

(3) Electricity, water, gas. 

(4) Telephone services; telegraph transmissions. 

(5) Rooms, meals, and drinks from places regularly offering such to 
public. 

(6) Railroads, sleeping, dining, and express cars and buses and 
trucks licensed by Public Service Commission engaged in transpor- 
tation of persons. 

Exem'ptions. — 

(1) Interstate and foreign commerce. 

(2) Nontaxable by State or Federal constitutional restrictions. 



52 SALES-TAX DATA 

(3) Motor fuel, fuel used to produce taxable utility services, feed for 
poultry or livestock and grain converted into foodstuffs which are 
ultimately subject to tax. 

(4) Made by religious, charitable, eleemosynary and penal insti- 
tutions and relief agencies. 

Bate. — 2 percent of gross receipts from sales. 

Collection in iP^O.— $23,019,000. 

Collection in iP^L— $29,515,000. 

Collection.— TubX payment to accompany monthly report. The 
retailer is to collect the tax from the purchaser and it is illegal for him 
to represent that he assumes or absorbs it. 

New Mexico 

occupational gross income tax 

Taxable. — Every person engaging or continuing in any business in 
New Mexico pays a tax based on gross receipts. 

Exemptions. — Receipts from the following are exempt: 

(1) Nonprofit organizations and societies. 

(2) Farm products. 

(3) Premiums collected by insurance companies on which a State 
tax is levied. 

(4) Salaries and wages. 

(5) School books. 

(6) Hospitals, infirmaries or sanitariums. 

(7) Interest, dividends, or rentals. 

(8) Newspapers and magazine sales, but not advertising space. 

(9) Gasoline or motor fuel. 

(10) Building and loan associations; State and national banks. 

(11) Water for irrigation, domestic, commercial, and industrial 
purposes. 

(12) Dormitories and dining halls of State educational institutions. 

(13) Sales to United States or New Mexico or its political sub- 
divisions. 

Rates. — The rates used in computing the tax depend on the source 
of the income and are: 

Mining, quarrying, producing: 

Oil, natural gas, carbon dioxide gas and laotash 2 percent. 

Other mineral products J4 of 1 percent. 

Manufacturing, smelting, refining, distilling, etc.: Oil, natural 
gas, carbon dioxide gas, potash, copper, gold, silver, lime- 
stone, sand, gravel, or other products ]4 of 1 percent. 

Wholesalers : 

Wholesale merchandising of goods, including alcoholic 

beverages and electricity to others for resale ^ of 1 percent. 

Retailers selling goods, equipment, and alcoholic beverages 
(except receipts from livestock, livestock feed, seeds, 
roots, bulbs, plants, fertilizer, agricultural implements, 

not including tractors) 2 percent. 

Automobiles, trucks or tractors 1 percent. 

Public utilities: Electricity, gas, intrastate telephone and radio 
messages, including local business, transportation of people 

and property 1 percent 

Contractors, all receipts 2 percent. 

Amusements: Theaters, picture shows, radio 2 percent. 

Professions : All professional services 2 percent. 

Real estate: Commissions 2 percent. 



SALES-TAX DATA 53 

Factors, agents or brokers: Commissions 2 percent. 

Miscellaneous 2 percent. 

All taxpayers pay a license fee of $ 1 . 
' " Collection in i^^O.— $4,198,000. 

Collection in 1941.— H, 265, 000. 

Collection. — Tax remittance to accompany monthly reports. Tax 
•tokens are used to facilitate reimbursement of persons in business. 

USE (COMPENSATING) TAX 

Taxable. — An excise tax is imposed on the storage, use or consump- 
tion in New Mexico of tangible personal property purchased from a 
retailer on or after July 1, 1939. 

Exemptions. — The following tangible personal property is exempt: 

(1) Property subject to the sales tax provisions of the occupational 
gross income tax. 

(2) Nontaxable because of Federal or State constitutional restric- 
tions, or used by U. S. or State Government or any political sub- 
division thereof or used by any religious, charitable or educational 

(institution. 

(3) Property purchased outside New Mexico on which a sales or 
use tax of another State has already been levied. 

(4) Products of farmers when sold by them. 

(5) Gasoline or motor fuel. 

(6) Property which becomes an ingredient or component part of 
any manufactured article. 

' (7) Electricity, gas or fuel consumed in manufacturing. 

(8) Livestock, feeds for livestock, seeds, roots, bulbs and plants and 
fertilizer. 

(9) Property brought into the State by nonresidents for their use 
while temporarily within the State. 

(10) Newsprint. 

(11) Railroad locomotives and equipment used in railroad trans- 
portation . 

(12) Chemicals used in mining, milling, or oil refining, except blast- 
ing powder or dynamite. 

Rates. — ^Two percent of the sales price; sales of automobiles, trucks 
or tractors are taxed at the rate of 1 percent. 

Collection in 1940. — (Included above in collection of occupational 
gross income tax.) 

Collection. — Tax remittance to accompany monthly returns. Re- 
tailers maintaining a place of business m New Mexico are required to 
collect the tax; however, purchasers are liable if the retailer fails to 
collect. 

, . . North Carolina 

occupational sales tax 

Taxable. — Wholesalers and retailers pay a tax on gross receipts from 
sales for the privilege of domg business. Sales mclude all transactions 
in which title ultimately passes and admissions to moving picture 
shows, theaters, and other exhibitions and sales of tangible personal 
property used in the construction of buUdmgs. 



54 SALES -TAX DATA 

Exemptions. — 

(1) Sales by maiuifacturers or producers to others for resale. 

(2) Gasoline on wliich the tax is paid. 

(3) Commercial fertilizer, lime and land plaster used for agricultural 
purposes. 

(4) Sales to the State or its subdivisions. 

(5) Sales of building material to Federal, State or local governments. 

(6) Sales prohibited from taxation under the constitutions of the 
United States or North Carolina. 

(7) Worthless accounts. 

(8) Public school books and Holy Bibles. 

(9) Sales of traded-in articles. 

(10) Food and food products for human consumption. 

(11) Ice. 

(12) Medicines. 

(13) Sales of products of farms, forests, waters and mines. 

(14) Horses and mules. 

(15) Coffins and caskets selling for less than $100. 

(16) Sales to trustees of churches. 

(17) Cotton, tobacco, peanuts and other products sold to 
manufacturers. 

Rate. — Three percent of gross retail sales; one-twentieth of 1 per- 
cent of gross wholesale sales; and an excise or use tax of 3 percent on 
sales of all new or used motor vehicles purchased for use on North 
Carolina streets and highways, if the sales tax has not been paid. 
Maximum tax for any article is $15. 

Everyone engaged in business on which tax is collected pays $1 
permit fee; wholesalers pay $10 annual license tax. 

Collection in 1940.— $12,208,000. 

Collection in 1941.— U4:, 247, 000. 

Collection. — The payment to accompany monthly report. The tax 
is to be passed on to the consumer and any contrary representation 
is illegal. 

USE TAX 

Taxable. — An excise tax is imposed on the storage, use or consump- 
tion in North Carolina of tangible personal property purchased from 
a retailer on or after July 1, 1941. 

Exemptions. — 

(1) Property expressly specified and exempted from the retail sales 
tax. 

(2) Property the sale of which is classified as a wholesale sale under 
the retail sales tax. 

(3) Property exempt from taxation by the State or United States 
constitutions. 

(4) Motor fuels upon which the gasoline tax has been paid. 

(5) Property brought into the State by a non-resident whUe tem- 
porarily within the State. 

Rate. — Three percent of sales price. Credit is allowed for a sales or 
use tax already paid on such property either in North Carolina or 
another State. 

Collection in 1940. — Included above in collection of occupational 
sales tax. 



SALES-TAX DATA 55 

Collection. — Tax payment to accompany return. The tax is col- 
lected by the retailer and is added to the sales price. It is unlawful 
for a retailer to advertise that he is absorbing the tax. 

North Dakota 
retail sales tax 

Taxable. — A tax is imposed on the gross receipts from all sales of: 

(1) Tangible personal property sold at retail in North Dakota. 

(2) Furnishing or service of steam, gas, electricity, water, and com- 
munication service, including such sales made by municipal corpora- 
tions in a proprietory capacity. 

(3) Tickets or admissions to places of amusement and athletic 
events. 

Exemptions. — 

(1) Sales the State cannot tax because of United States law or 
State-constitutions prohibitions. 

(2) Transportation service. 

(3) Contracts executed before May 1, 1935. 

(4) Tickets and admissions to State, county, or local fairs and gross 
receipts from educational, religious, or charitable activities. 

(5) Sales already subject to an excise tax. 

Rate. — -Two percent of gross receipts from retail sales. Retailers' 
permit fee is 50 cents. 

Collection in iP^O.— $3,099,000. 

Collection in i^^/.— $3,364,000. 

Collection.— Ta,x to be paid at time of filing montlily report. The 
tax is to be added to the sale price, and it is unlawful for the retailer 
to represent that he assumes or absorbs the tax. 

USE TAX 

Taxable. — An excise tax is imposed on the storage, use, or con- 
sumption in North Dakota of tangible personal property purchased 
at retail. 

Exemptions. — 

(1) Property subject to the sales tax. 

(2) Motor vehicles subject to the excise tax imposed by chapter 
167, Law 1937. 

(3) Property brought into the State by a nonresident while 
temporarily within the State. 

(4) Property used in interstate commerce. 

(5) Property used to perform a public-works contract executed 
prior to this act. 

(6) Property subject to a special license or stamp tax. 

(7) Property used in the business of manufacturmg. 

(8) Industrial material and supplies used in compounding or manu- 
factm-ing property ultimately sold at retail. 

Rate. — Two percent of purchase price. 

Collection in 1940. — Included above in collection of retail sales tax. 

Collection. — Tax payments to accompany return. Primary lia- 
bility to collect tax ia on retailer; however, vendees are liable for the 
tax if the retailer does not coUect it. 



56 sales-tax data 

Ohio 

retail sales tax 

Taxable. — Each retail sale of tangible personal property excepting 
sales the purpose of which is — 

(a) To resell. 

(b) To incorporate the property into tangible personal property or 
to use or consume it directly in manufacturing, processing, refining, 
mining, farming, horticulture, floriculture, the making of retail sales, 
or the rendition of a public utility service. 

(c) Security for the performance of an obligation by the vendor. 

(d) To use or consume it in industrial cleaning. 

(e) To resell, hold, use, or consume it as evidence of an insurance 
contract. 

Exemptions. — 

(1) Sales to the State or its political subdivisions. 

(2) Food for human consumption off the premises where sold. 
(2a) Sales of feed and seeds. 

(2b) Newspapers and magazines shipped second class. 
(2c) Sales of ice. 

(3) Motor-vehicle fuel, liquid fuel. 

(4) Cigarettes, brewers' wort and malt. 

(5) Sales of beer, wines, and spirituous liquors. 

(6) Artificial or natural gas, electric, water, other sales by utility 
companies subject to excise, taxes. 

(7) Casual and isolated sales. 

• . (8) Sales exempt under the Federal Constitution and transportation 
charges. 

(9) Professional, insurance, or personal services involving sales for 
which no separate charges are made. 

(10) Sales to charitable and religious organizations. 

(11) Explosives used in the shooting of oil or gas wells or coal mines. 
(11a) Sales of food to students in school cafeterias, dormitories, 

fraternities, and sororities. :; ' ; 

(12) Sales of hearses and ambulances to nonresidents to be u§e&^ 
outside of Ohio and sales of ships, gas-filled dirigibles, or vessels used 
principally in interstate commerce. 

Rate. — ^Vendor's license fee, $1. Sales tax computed on each 
dollar and/or fraction thereof according to the following: ; ^' • ■ 

Price Tax ' ■ 

1 to 8 cents None 

9 to 40 cents 1 cent 

■ 41 to 70 cents 2 cents : ■) 

71 cents to $1 3 cents ., 

Collectionin 1940. —$50,985,000. ' -) 

Collectionin 1 941. —$&3, 119, 000. ' ') 

Collection. — Payment by canceling prepaid tax receipts or coupons 
at the time of sale, such coupons to be purchased by licensed retailers, 
from the Treasurer of State or his agents, or the county treasurers, at 
such discount, not exceeding 3 percent as the Commissioner, by 
regulation may allow. Prepayment by vendor and waiver of collection 
from vendee may be permitted by Commissioner in exceptional i 
instances. •' 



SALES-TAX DATA 57 

USE TAX 

Taxable. — An excise tax is levied on the storage, use, or other con- 
sumption in Ohio of tangible personal property purchased after 
January 1, 1936, except when the use is for the same purposes excepted 
in the definition of "retail sale" as above. 

Exemptions. — 

(1) Property subject to the sales tax or property to which the sales 
tax is expressly inapplicable or property used for a purpose which 
would exempt the sale of such property. 

(2) Property protected by the Federal Constitution. 

(3) Casual and isolated sales. 

(4) Building materials contracted for prior to January 1, 1936. 
Rate. — Use tax based on purchase price of property at same rates as 

sales tax. 

Collection in 1940. — Included above in collection of retail sales tax. 

Collection. — Payment quarterly by consumer to the State treasurer 
unless tax receipts have been obtained showing payment of the tax to a 
seller maintaining a place of business in Ohio or to a retailer having a 
certificate of registration from the tax commissioner to collect the tax. 

Oklahoma 

retail sales tax 

Taxable. — A tax is imposed upon three classes of taxpayers, those 
regularly engaged in business at an established place, those making 
occasional sales, and transients making seasonal sales. The tax is 
levied upon the gross receipts derived from all sales of the following: 

(1) Tangible personal property. 

(2) Natural or artificial gas, electricity, ice, steam or other public 
service, except water. 

(3) Transportation for hire of persons by common carriers. 

(4) Telephone and telegraph service. 

(5) Printing of all kinds. 

(6) Service of furnishing rooms by hotels, apartment hotels, public 
rooming houses and tourist camps. 

(7) Service of furnishing storage by auto hotels and parking lots. 

(8) Food, confection or drinks prepared by dispensers and sold for 
immediate consumption. 

(9) Advertising of all kinds. 

(10) Dues, fees or complimentary tickets for admission to places 
of amusements. 

Sales of services and tangible personal property for improving real 
estate and sales to contractors are sales to consumers and not sales 
for resale. 

Exemptions. — Gross receipts from the following: 

(1) Non-intoxicating beverages. 

(2) Cigarettes. 

(3) Farm products of Oklahoma. 

(4) Dues paid to religious, etc., societies not operated for profit. 

(5) Sales to or by churches or charitable organizations. 

(6) Transportation of school children. 



58 SALES-TAX DATA 

(7) Transportation in towns and cities where the fare does not 
exceed 15 cents. 

(8) Food in school cafeterias. 

(9) Carrier sales of newspapers and periodicals under 20 cents. 

(10) Sales to United States, Oklahoma, or on political subdivision. 

(11) Gasoline or motor fuel. 

(12) Petroleum or natural gas. 

(13) Motor vehicles. 

(14) Sales for resale. 

(15) Sales of advertising space in newspapers, periodicals, or bill- 
boards. 

(16) Admission fees at State, county, or township fairs. 
Bate. — Two percent of gross proceeds or gross receipts^ 
Collection in /^^O.— $10,952,000. 

Collection in ^^47.— $11,788,000. 

Collection. — Tax payment accompanies the report. The tax is pay- 
able by the seller who collects the tax from the purchaser. Tokens 
may be issued by the tax commission. 

USE TAX 

Taxable. — There is imposed upon every person storing, using, or 
otherwise consuming, within Oklahoma, tangible personal property 
purchased or brought into Oklahoma an excise tax on the storage, 
use, or other consumption in Oklahoma of such property. 

Exemptions. — 

(1) Articles brought into Oklahoma by nonresident visitors. 

(2) Tangible personal property purchased for resale. 

(3) Tangible personal property already subject to a tax of like 
nature. 

(4) Tangible personal property (other than that used in connecjbion 
with commercial, industrial, professional, or business pursuits), the 
purchase price of which does not exceed $100 monthly. 

(5) Property exempt under the sales tax. 

(6) Property brought in by individuals about to become residents. 

(7) Tangible personal property used in interstate commerce by 
railroads. 

(8) Livestock purchased outside Oklahoma and brought into Okla- 
homa for feeding purposes. 

Rate. — Two percent of the purchase price. 

Collection in 1940. — Included above in collection of retail sales tax. 

Collection. — Tax payment accompanies the return. 

South Dakota 

Taxable. — Retailers pay a tax on the privilege of doing business 
based on gross receipts from: 

(1) Retail sales of tangible personal property, conditional, credit, 
or otherwise. 

(2) Furnishing or service of gas, electricity, water and communi- 
cation service to consumers, including that sold by municipal corpo- 
rations in their proprietary capacity. 

(3) Tickets or admissions to places of amusement and athletic 
events. 



SALES-TAX DATA 59 

When the terms of sale extend credit longer than 60 days, the tax 
is imposed as cash is received. 
Exemptions. — ■ 

(1) Sales on which the tax is prohibited by United States or State 
laws or constitution. 

(2) Furnishing or service of transportation. 

(3) Property used for performance of a contract of public works 
made before July 1, 1935. 

(4) Admissions to state, county, or local fairs and receipts of 
activrities of organizations which are used for charitable, educational, 
benevoleDt or fraternal purposes. 

(5) Sales to United States or South Dakota or any of its political 
subdivisions or relief agencies. 

(6) Sale of gasoline, beer, intoxicating liquors, malt, butter sub 
stitutes and cigarettes already taxed. 

(7) Resale by dealers of used farm machinery. 

(8) Exchange of processed agricultural products for unprocessed 
agricultural products. 

Rates. — ^Two percent on gross receipts; Retailers' permit fee is 
50 cents, if a permit has previously been revoked the permit fee is $1 

Collection in ^5^0.— $4,504,000. 

Collection in ^^4^.— $5,014,000. 

Collection. — Tax remittance to accompany report. It is unlawful 
for a retailer to represent that the tax is not part of the purchase 
price or to offer to refund the amount of the tax. 

USE TAX 

Taxable. — An excise tax is imposed on the privilege of the use, 
storage, and consumption in South Dakota of tangible personal 
property purchased on or after July 1, 1939. 

Exemptions. — 

(1) Property subject to sales tax. 

(2) Motor vehicles. 

(3) Property nontaxable by Constitutions of United States and 
South Dakota. 

(4) Gasoline, beer, liquor, butter substitutes, and cigarettes. 

(5) Property brought into the State by nonresidents for their use 
while within the State. 

(6)* Property not readily obtainable in South Dakota which is to 
become a capital asset of any business. 

(7) Property used in compounding or manufacturing the finished 
product to be ultimately sold at retail. 

(8) Fuel used in creating power, light, heat, steam, and gas. 

(9) Industrial material and equipment not readily obtainable in 
South Dakota. 

Rates. — Two percent of gross receipts from sales. 
Collection in 1940. — -Included above in "Collection of retail sales tax." 
Collection. — Tax remittance is to accompany return. It is unlawful 
for the retailer to assume the tax or to offer to refund the tax. 



70005—42—5 



60 sales-tax data 

Utah 

gross sales tax 

Taxable. — A tax is levied on the amount of gross receipts or consider- 
ation for the following: 

(1) Retail sales of tangible personal property (including fees). 

(2) Transportation, telephone, telegraph, gas, electricity, and heat 
sales or service. 

(3) Meals furnished. 

(4) Admissions to any place of amusement, entertainment, or 
recreation. 

Transactions where possession passes but title is retained for secur- 
ity purposes are sales; the right to continuous possession under a con- 
tract or a lease is taxable as a sale would have been taxable. 

Exemptions. — 

(1) Commodities, the sale or use of which is subject to a State excise 
tax, except fees. 

(2) Sales to United States or Utah or its political subdivisions. 

(3) Sales made by charitable, eleemosynary, or religious corpora- 
tions in their regular f mictions. 

(4) Sales nontaxable by the Constitutions of United States and 
Utah. 

(5) Interstate movements of freight and express or street railway 
fares, newspapers, or newspaper subscriptions. 

Rate. — Two percent of gross receipts from taxable transactions. 

Collection in ^,940.— $4,199,000. 

Collection in i^^i.— $4,542,000. 

Collection. — Every person receiving any payment or consideration 
from the sale of property or services subject to tax is responsible for 
the collection of the tax; tax payment is to accompany bimonthly 
report. 

USE TAX 

Taxable. — A tax is levied on the storage, use, or other consumption 
in the State of tangible personal property purchased after July 1, 1937. 
ExemjJtions. — The following property: 

(1) On which sales tax has been paid. 

(2) Not taxable by restrictions of Federal or State constitutions. 

(3) Temporarily within the State owned by a nonresident. 

(4) Subject to a sales or excise tax levied by this or any other State 
or the Federal Government. 

(5) Mineral bullion, mineral concentrates, or mineral precipitates. 

(6) Property used by the Federal, State, or local Governments. 

(7) Purchased for resale or used in manufacturing, including labels, 
containers, and shipping cases. 

The tax on property purchased on credit, whereby title is to pass in 
the future or there is a conditional sale, is paid proportionately on 
each installment. 

Rat'. — Two percent of sale price. 

Collection in 1940. — Included above in retail sales tax collections. 

Collection. — Tax remittance is to accompany required bimonthly 
returns. Retailers are required to register with the State tax com- 
mission and collect the tax on all property sold to be put to a taxable 



SALES-TAX DATA 61 

use in the State but the consumer is ultimately liable for all tax pay- 
ments. 

Washington 

retail sales tax 

Taxable. — A tax is imposed on all retail sales in Washington, includ- 
ing retail sales of intoxicating liquor by the State liquor stores, and 
is computed on the basis of the selling price. 

Exem'ptions. — The following sales are exempt: 

(1) Isolated or casual. 

(2) Subject to public utilities or admission tax. 

(3) Distribution and newsstand sale of newspapers. 

(4) Nontaxable by prohibitions of Constitutions and laws of United 
States and Washington. 

(5) Motor fuel already subject to an excise tax. 

Rate. — ^3 percent of the selling price. AU taxpayers pay a permit 
fee of $1. 

Collection in ^^^O.— $20,689,000. 

Collection in 1 9 U.—%24:, 2,^4:, 000. 

Collection. — It is the duty of the seller, including persons with actual 
or constructive possession and power to sell, to collect the tax from 
the buyer and upon failure to do so becomes liable for it himself. 
It is unlawful for the seller to refund the tax or to represent that he 
absorbs or pays it. 

USE (COMPENSATING) TAX 

Taxable. — An excise tax is levied for the privilege of using within 
the State any article of tangible personal property purchased at retail 
or produced or manufactured for commercial use, irrespective of 
whether the article is manufactured within the State or available for 
purchase within the State, and is based on the value of the article. 

Exem'ptions. — The following property is exempt: 

(1) Used by nonresidents while temporarily in the State. 

(2) On which sales tax has been paid. 

(3) Subject to the public-utilities tax. 

(4) Rolling stock, aircraft, or floating equipment which was first 
used in the State in interstate or foreign commerce. 

(5) Nontaxable by United States and State constitutional limita- 
tions. 

(6) Motor fuel already subject to an excise tax. 

Rates. — Three percent of the value. All taxpayers pay a permit fee 
of$l. 

Collection. — Included above in retail sales tax collections. 
Collection. — Remittance to accompany bimonthly report. 

West Virginia 
retail sales tax 

Taxable. — For the privilege of engaging in the business of selling 
tangible personal property at retail and dispensing services, retail 
dealers collect a tax from the purchaser on the gross proceeds from all 
sales. Retail sales of tangible personal property include conditional 



62 



SALES-TAX DATA 



sales and any transaction in which title is to ultimately pass but docs 
not include isolated sales; purchasers must pay the tax on a credit 
sale at the tune it is made. Services include the furnishing of all 
services except professional or personal services and those furnished 
by corporations subject to the public service or State road commission. 
Exemptions. — Sales of the following are exempt: 

(1) Gtisol'n? subject to excise tax. 

(2) Electricitv, gas, steam, and water. 

(3) School books. 

(4) Made to United States, West Virginia, or its subdivisions. 

(5) Motor vehicles titled by the Statu road commission. 

(6) Bread, butter, eggs, flour, and milk except when served as a 
part of a meal by hotels, restaurants, and others. 

(7) Surplus foods secured by blue surplus food order stamps issued 
by the Federal Surplus Commodities Corporation, 

Rate. — Two percent of gross proceeds. 

Collection in 1940.— $18,759,000. 

Collection in 1941.— $20,874^,000. 

Collection. — Tax remittance to accompany monthly report. The 
tax is to be paid by the consumer and included in the purchase price 
and it is unlawful for a retailer to maintain otherwise. 

OCCUPATIONAL GROSS INCOME TAX 

Taxable. — A tax is levied on all persons and corporations, for the 
privilege of engaging in business, based on gross proceeds and a sur- 
tax is levied on all business except contractors, industrial loan com- 
panies, water companies, sales of tangible personal property at retail, 
and business not otherwise specifically taxed. A deduction of $25 
in amoimt of tax is allowed to every person. 

Exemptions. — 

(1) Insurance companies paying a premium tax; 

(2) Persons engaged in the banking business; 

(3) Nonprofit cemetery companies; 

(4) Societies, organizations, etc., organized for the benefit of their 
members or religious or charitable purposes; 

(5) Building and loan associations and Federal savings and loan 
associations; 

(6) Persons collecting income from real or personal property pay- 
ing a net income tax. 

Rates. — 



Product or business 



Coal 

Oil-. 

Natural gas, production (over $5,000) 

Natural gas, service 

Blast furnace slag 

Sand, gravel, or other minerals, not mined or quarried 

Limestone or sandstone 

Timber 

Manufacturing _ 



Normal 


With sur- 


tax gross 


tax of 


proceeds of 


•>io of 


production 


normal tax 


Percent 


Percent 


1 


1.3 


3 


3.9 


6 


7.8 


3 


3.9 


3 


3.9 


3 


3.9 


1.5 


1.95 


1.5 


1.95 


.3 


.39 



SALES-TAX DATA 



63 



Product or business 



Normal : With sur- 
tax gross 1 tax of 
proceeds of ?1oof 
production ! normal tax 



Industrial loan companies 

Sales, retailers (including restaurants, etc., serving food) 

Sales, wholesalers or jobbers 

Electric railways Qocal) 

Water companies 

Electric companies (domestic, commercial lighting) 

Electric companies (other income) 

Toll bridges 

Other public utilities 

Other natural resource products 

Contractors 

Amusements. Including radio broadcasting 

All other businesses 

Income from real and i)ersonal proijerty (if no personal income tax paid). 




1 No surtax. 



Collection in i^^O.— $9,849,000. 

Collection. — Tax payment to accompany quarterly and yearly 
reports. 

Wyoming 



RETAIL SALES TAX 

Taxable. — A tax is levied on retail sales of — 

(1) Tangible personal property; 

(2) Transportation, telephone, and telegraph services; 

(3) Gas, electricity, and heat to consumers by utilities w'hether 
privately or municipally owned; 

(4) ^Ieals served at places regularly catering to the public ; 

(5) Admissions to places of amusement, entertainment, or 
recreation. 

Rental received under a lease granting continuous possession, if 
the sale of the article would be taxable, mstallment payments, when 
title is to pass in the future, and conditional sales receipts are taxable. 

Exemptions. — The following sales are exempt: 

(1) Subject to a sale or excise tax in excess of 20 percent under 
laws of United States or Wyoming; 

(2) Made to United States or Wyoming and its political sub- 
divisions ; 

(3) Made to, or in the regular course of activities of religious, 
charitable, and eleemosynaiy institutions; 

(4) Nontaxable by prohibitions of the laws of United States or 
Wyoming; 

(5) Livestock, livestock or poultry feed, seeds, plants, and fertilizer; 

(6) City taxicab and bus fares less than 24 cents; 

(7) Interstate movement of freight, passengers, and express; 

(8) Intrastate or interstate movements of raw farm products to 
processing or manufacturmg plants. 

Rites.— 2 percent of gross receipts. The annual license fee for 
those paving the tax is $2. 

Collection in ^940.— $1,981,000. 
Collection in 1941.— $2,296,000. 



64 SALES-TAX DATA 

Collection. — Tax remit tanco to accompany report. It is unlawful 
for any retailer to represent that he will assume, absorb, or refund 
the tax. 

USE TAX 

Taxable. — Storage, use, or other consumption in the State of tangible 
personal property purchased from a retailer on or after June 1, 1937. 

Exemptions. — Storage, use, or consumption of the following property 
is exempt: 

(1) Sale of which is subject to the sales tax or a 20 percent excise 
tax; 

(2) Nontaxable by Federal or State constitutional restrictions; 

(3) Used by State or Federal Governments; 

(4) Used by charitable on eleemosynary institutions; 

(5) Products of Wyoming mines or farms; 

(6) Subject to gasoline tax; 

(7) Property or fuel used in manufacturing; 

(8) Livestock, livestock and poultrj'^ feed, seeds and fertilizer; 

(9) Gas, electricity, and water; 

(10) Used by nonresidents wliile temporarily in State; 

(11) Used in public works contracts; 

(12) Machinery, equipment, and industrial materials not promptly 
purchased in State. 

Rate. — Two percent of sale price. 

Collection in 1940. — Included above in collection of retail sales tax. 

Collection. — Remittance to accompany monthly report. 



Part IV 

PROPOSED MANUFACTURERS' EXCISE TAX, REVENUE 

BILL OF 1932, AND WAYS AND MEANS 

COMMITTEE REPORT 

A. BILL 

B. REPORT 



65 



A. FROM PROPOSED REVENUE BILL, 1932 

TITLE IV— MANUFACTURERS' EXCISE TAX 

Sec. 601. Impositiox of Tax 

(a) In addition to any other tax or duty imposed by law, there 
shall be imposed a tax of 2% per centum of the sale price (except as 
provided in subsection (d)) on the sale of every article sold in the 
United States by the manufactiu'er or producer thereof, if licensed 
or required to be licensed imder tliis title, except in the case of — 

(1) sales by a licensed manufacturer to another licensed 
manufactm-er of articles for further manuf actiu-e ; 

(2) sales by a licensed manufactm-er to a registered dealer, of 
articles for further manufacture to be resold to a licensed manu- 
factiu-er; 

(3) sal?s by a licensed manufacturer to any person of articles 
for fm'ther manufactm^e to be resold to a licensed manufacturer, 
but only if such articles are delivered by the fii'st licensed manu- 
facturer to the second licensed manufacturer; 

(4) sales for exportation; 

(5) sales to a State or pohtical subdivision thereof, or any 
agency thereof, of articles for use solely in the exercise of a gov- 
ernmental function; or 

(6) sales of articles hereinafter speciiicaUy exempted, 

(b) In addition to any other tax or duty imposed by law, there 
shall be imposed a tax of 2}^ per centum ad valorem (except as pro- 
vided in subsection (d)) on every article imported into the United 
States, imless — 

(1) the consignee (within the meanmg of the Tariff Act of 
1930) is a licensed manufactm-er (or his agent) and the article is 
an article for further manufactm-e, or 

(2) the consignee (within the meaning of such Act) is a regis- 
tered dealer (orchis agent) and the article is an article for fm-ther 
manufactm"e to be resold to a licensed manufactm-er, 

(3) the article is imported by a State or pohtical subdivision 
thereof, or any agency thereof, for use solely in the exercise of a 
governmental function, or 

(4) the article is specifically hereinafter exempted. 

(c) The tax imposed under subsection (b) shall be levied, assessed, 
collected, and paid in the same manner as a duty imposed by the 
Tariff Act of 1930, and shall be treated for the purposes of all pro- 
visions of law relating to the customs revenue as a duty imposed by 
such Act, except that — 

(1) the value on which such tax shall be based shall be the 
dutiable value (under section 503 of such Act) of the article, plus 
the customs duties, if any, imposed thereon under any provision 
of law ; 

67 



68 SALES-TAX DATA 

(2) for the purposes of section 489 of such Act (relating to 
additional duties in certain cases of undervaluation) such tax 
shall not be considered an ad valorem rate of duty or a duty based 
upon or regulated in any manner by the value of the article; 

(3) such tax shall not be imposed upon any article imported 
prior to the date on which this title takes effect; 

(4) no drawback of such tax (except tax paid upon the importa- 
tion of an article described in subsection (d) (4) ) shall be al- 
lowed under section 313 (a), (b), or (f) of the Tariff Act of 1930 or 
any provision of law allowing a drawback of customs duties on 
articles manufactured or produced with the use of duty-paid 
materials; 

(5) such tax shall be imposed in full iiotwithstanding any pro- 
vision of law or treaty granting exemption from or reduction of 
duties to products of any possession of the United States or of 
any country; and 

(6) when he deems such action to be in the interest of the 
revenue, the Secreatry may direct that such tax with respect to 
any class of articles designated by him shall be levied, assessed, 
collected, and paid in the same manner and subject to the same 
provisions of law' as the tax imposed by subsection (a). 

(d) In the case of the following articles, the tax imposed by this 
title shall be at the follow^ing rates: 

(1) Lubricating oils, of the grades designated (at the time of 
the enactment of this Act) by Society of Automotive Engineers 
viscosity numbers 20 to 70, inclusive, 4 cents a gallon; 

(2) brewer's w^ort, liquid malt, malt syrup, and malt extract, 
fluid, solid, or condensed, if containing less than 15 per centum 
of solids by weight, 5 cents a gallon; if containing 15 per centum 
or more of solids by weight, 35 cents a gallon; 

(3) grape syrup, grape concentrate, and evaporated grape 
juice, if containing more than 35 per centum of sugars by Weight, 
40 per centum of the basis on which the tax is computed under 
subsection (a) or (b) of this section or section 603, as the case 
may be; 

(4) crude petroleum, fuel oil derived from petroleum, gas oil 
derived from petroleum, and gasoline, imported into the United 
States, 1 cent a gallon; but no article described in this paragraph 
shall be exempted upon importation from tax under this title 
as an article for further manufacture, and no credit or refund 
of tax imposed upon the importation of any article described in 
this paragraph shall be allowed under section 605 (a). 

(e) Exemption under this section of sales or importations shall be 
allowed or granted only upon compliance with the regulations. 

Sec. 602. Exempt Articles 

No tax under this title shall be imposed on the sale or importation 
of the following articles: 

(1) Farm or garden products produced in the United States; 

(2) fertilizers and such grades of articles as are used chiefly for 
fertilizers, or chiefly as ingredients in the manufacture of fer- 
tilizers; 



SALES-TAX DATA gg 

(3) garden or field seeds; 

(4) bran and shorts and feeds for animals or fowls; 

(5) meat, fish (including shellfish), and poultry, fresh, dried, 
frozen, chilled, salted, or in brine; 

(6) bacon, hams, pig shoulders, and pig jowls, not cooked or 
packed in air-tight containers; 

(7) butter, oleomargarine, and other substitutes for butter; 

(8) cheese; 

(9) milk and cream, in any form; 

(10) eggs in the shell; 

(11) bread; 

(12) flour and meal made of grain, and semolina; 

(13) sugar; 

(14) tea; 

(15) cofi^ee; 

(16) salt; 

(17) any article with respect to which an mternal-revenue tax 
is imposed under existmg law; 

(18) water not in closed containers; 

(19) newspapers, magazines, and other periodicals; 

(20) books, pamphlets, and music, in raised print, used ex- 
clusively by or for the blind; 

(21) textbooks for use in private or public schools or other 
institutions of learning; 

(22) Bibles, comprising the books of the Old or New Testa- 
ment, or both; 

(23) rosaries, chaplets, medals, and similar articles of rehgious 
devotion; hymn books, prayer books, and manuals of religious 
devotion; books of religious reading, thought, or action; books 
of religious statistics; and 

(24) altars, pulpits, communion tables, baptismal fonts, and 
shrines ; parts thereof ; religious statuary and pictures ; collection 
envelopes, plates, and baskets; stationery and record books; cas- 
socks, banners, and articles of regalia worn on the person or car- 
ried in the hand; tapers, lights, and candles; sanctuary oil; all 
the foregoing when manufactured exclusively for use in houses of 
worship. 

Sec. 603. Tax on Sales by Registeeed Dealers 

(a) There shall be imposed on the sale or other disposition by a reg- 
istered dealer of any article sold to or imported by him free of tax by 
virtue of his registration, if not sold to a licensed manufacturer, as an 
article for further manufacture, a tax of 2% per centum of the price 
(subject to the provisions of section 604 (a)) at which such article was 
sold to such registered dealer, plus, in the case of an imported article, 
the amount of customs duties imposed thereon under any provision 
of law, if not included in such price (except that in the case of an 
article specified in section 601 (d) the tax shall be at the rate therein 
provided). If the Commissioner determines that the records with 
respect to any article are inadequate, such article shall be hold to be 
sold otherwise than to a licensed manufacturer as an article for further 
manufacture. 



70 SALES-TAX DATA 

(b) If the Commissionor determines that it is not necessary in the 
interests of the revenue to trace the identity of articles of any class 
in the hands of registered dealers, the regulations may provide a 
method of determining the proper tax liability of registered dealers 
with respect to articles of that class without regard to the identity of 
the individual articles. 

Sec. 604. Sale Price 

(a) Generally. — In determining the sale pi'ice of an article there 
shall be included any charge for coverings and containers of whatever 
nature, and any charge incident to placing the article in condition 
packed ready for shipment, but there shall be excluded the amount 
of tax imposed by this title. A transportation, delivery, insurance, 
installation, or other charge (not required by the foregoing sentence to 
be included) shall be excluded from the sale price only if the amount 
thereof is esta])lished to the satisfaction of the Commissioner, in. 
accordance with the regulations. 

(b) Sales on Consignment. — In the case of an article sold by a 
consignee, the sale price shall be the fair manufacturer's price for the 
article. 

(c) Retail Sales by Licensed Manufacturer. — In the case of 
an article sold by the manufacturer or producer thereof at retail (or 
directly to the consumer or user), the tax shall be imposed upon the 
price at which so sold, except that in the case of any such article 
ordinarily sold at wholesale by manufacturers or producers, the tax 
shall be imposed upon the fair manufacturer's price for the article. 

(d) Installment Sales. — In the case of a contract for the sale 
by a licensed manufacturer of an article, wherein it is provided that 
the sale price shall be paid to the manufacturer b}?^ installments, and 
the title to the article sold does not pass to the purchaser thereof 
until a future date notwithstanding partial payment by installments, 
or in the case of a conditional sale, each partial payment shall be 
regarded as a sale and the tax shall be paid on the portion of the 
sale price represented by the instalhnent. 

(e) Leases and Royalties. — If a licensed manufacturer leases an 
article or transfers the right of using the article but not the title thereto 
or imposes a royalty on the use of an article, each payment with respect 
to the article shall be treated as a sale and the tax shall be paid on the 
amount of such payment. Any such lease, transfer, or imposition of 
royalty on the use of any article by a registered dealer shall be treated 
as a sale. 

(f) jManufacture Under Contract. — For the purposes of this 
title, a person who manufactures or produces an article for another 
person (other than a licensed manufacturer) who furnishes materials 
and retains title thereto, shall be regarded as the manufacturer or 
producer of the article, and the tax shall be imposed upon the pay- 
ment, or, if there is more than one payment, the tax shall be imposed 
upon each payment. 

(g) Use or Transfer of Article in Special Cases. — If a licensed 
manufacturer — 

(1) uses otherwise than as an article for further manufacture 
(including use as material in repair work) an article manufactured 



SALES-TAX DATA 



71 

or produced by him, or sold to or imported by him free of tax bv 
virtue of his hcense; ■^ 

(2) transfers the title to an article by gift; 

(3) transfers the title to, or the right to use, an article to any 
pei-son (otherwise than through an arm's-length transaction) at 
less than the fair market price; 

such use or transfer shall be considered a sale for the purposes of this 
title and the sale price shall be the fair manufacturer's price for such 
article, with allowance for any tax previously paid with respect to 
any materials used m manufacturing or producing the article. 

(h) For the purposes of this section, the fair manufacturer's price 
lor an article shall be the sale price for such articles, in the ordinary 
couree of trade, of manufacturers or producers thereof, as determined 
by the Commissioner. 

Sec. 605. Overpayments, Credits, and Refunds 

(a) A credit against tax under a later return, or a refund mav be 
allowed or made — ' 

(1) to a hcensed manufacturer, m the amount of anv tax under 
this title which has boen prid with respect to an*^ article for 
further manufacture purchased by him ; 

(2) to a manufacturer or producer when he becomes licensed 
m the amount of any tax paid under this title with respect to 
articles for further manufacture on . hand when the hcense is 
granted; 

(3) to the exporter, in the case of an article sold for exporta- 
tion or exported for sale, in the amount of any tax paid under 
this title with respect to the article; and 

(4) to a licensed manufacturer or registered dealer who has 
paid tax under this title with respect to an article, when the 
sale price on which the tax was based is readjusted by reason 
ol return or repossession of the article or a covering or container 
or by a bona fide discount, rebate, or allowance: m the amount 
of that part of the tax proportionate to the part of the sale price 
which IS refunded or credited. 

(b) Credit or refund under subsection (a) shall be allowed or 
made only upon comphance with regulations. 

(c) In no case shall interest be aUowed with respect to any amount 
ol tax under this title credited or refunded. 

(d) In no case shall both credit or refund under subsection (a) and 
remission or drawback under the customs laws of the tax hnposed by 
this title be allowed on account of the exportation of an article. 

i^-^j J overpayment of tax under this title shall be credited or 
refunded (otherwise than under subsection (a)), m pursuance of a 
court decision or otherwise, unless the person who paid the tax es- 
tabhshes, m accordance with regulations, (1) that he has not included 
the tax m the price of the article with respect to which it was im- 
posed, or collected the amount of tax from the vendee, or (2) that he 
has repaid the amount of the tax to the ultunate purchaser of the 
article, or unless he files with the Commissioner written consent of 
such ultimate purchaser to the allowance of the credit or refund 



72 sales-tax data 

Sec. 606. Licensed Manufacturers and Registered Dealers 

(a) Manufacturers and Producers. — Every manufacturer or 
producer (except as hereinafter providetl) is hereby required to take 
out an annual license, in accordance with regulations, and shall pay a 
fee of $2 therefor. Licenses under this section shall expire upon the 
expiration of one year after the date on which this title becomes 
effective, and annually thereafter. 

(b) Exemptions. — No license shall be required (but a license may 
be granted upon application) in the case of a manufacturer or 
producer — 

(1) if a farmer, with respect to his farm or garden products; or 

(2) if for the preceding year the total sale price of all articles 
(other than exempt articles) manufactured or produced by him 
was less than $20,0C0; or 

(3) if, in the case of a manufacturer or producer not engaged in 
manufacture or production of articles Mother than exempt articles) 
during the w^hole of the preceding year, such manufacturer or 
producer files with the Commissioner a statement under oath 
that to the best of his belief the probable total sale price of all 
articles) articles (other than exempt to be manufactured or pro- 
duced by him during the year for which the exemption is claimed 
will be less than $20,000; 

but in the case of any manufacturer or producer exempted under 
clause (2) or (3) of this subsection, if the Commissioner determines, on 
the basis of sales for any period during the year for which the exemption 
was granted, that the probable total sale price of all articles (other 
than exempt articles) manufactured or produced by such manufacturer 
or producer during such year will not be less than $20,000, or if the 
total sale price of all articlep (other than exempt articles) manufactured 
or produced and sold by such manufacturer or producer during such 
year reaches $20,000, such manufacturer or producer shall thereupon 
be required to be licensed. 

(c) Dealers and Importers. — A dealer in or importer of articles 
for further manufacture to be sold to licensed manufacturers may be 
granted an annual registration by the Commissioner, upon application 
in accordance with regulations and — 

(1) payment of a fee of $2 and giving bond w^ith sureties 
approved by the Commissioner and in such form and in such 
amount (not less than $2,000 nor more than $15,000) as the 
Commissioner shall prescribe, as liquidated damages, conditioned 
that he will keep adequate books, records, and accounts in 
accordance with this title and regulations, will render true state- 
ments of all sales by him, taxable or nontaxable, of articles sold 
to him free of tax by virtue of his registration, and will pay any 
tax imposed by this title; or 

(2) payment of a fee of $100. 

Registrations under this subsection shall expire upon the expiration 
of one year after the date on which this title becomes effective, and 
annually thereafter. 

(d) Revocation or Cancellation or Dealer's Registration. — 
If the Commissioner finds that a registered dealer has violated any 
provision of law applicable to the tax imposed by this title, he may 



SALES-TAX DATA 73 

revoke his registration. If the registration of any registered dealer is 
revoked, he shall not be entitled to registration within a period of one 
year after such revocation. Tlie registration of any registered dealer 
may be canceled upon application by liim. 

(e) Tax on Revocation, Cancellation, or Expiration of 
Registration. — If a registered dealer's registration is revoked or 
canceled under subsection (d), or if a registered dealer's registration 
expires and is not renewed, he shall pay the tax imposed by this title 
(as if on a taxable sale at the time of revocation, cancellation, or ex- 
piration) on all articles purchased or imported by him free of tax by 
virtue of his registration and not resold by him prior to such revoca- 
tion, cancellation, or expiration. 

(f) Tax on Registered Dealer on Date Title Ceases to Be 
in Effect. — Every dealer or importer registered on the day on which 
ttie tax imposed by this title ceases to be in effect, shah pay the tax 
imposed by this title (as if on a taxable sale on such date) on all 
articles purchased or imported by him free of tax by virtue of his 
registration and not resold by him on or before such date. 

(g) Tax on Expiration of Manufacturer's or Producer's 
License. — If a manufacturer or producer ceases to be licensed before 
the date on which the tax imposed by this title ceases to be in effect, 
he shall pay the tax which would be imposed on a sale to him, as of 
the date on which he ceases to be licensed, of all articles purchased 
or imported by him free of tax by virtue of such license and not used 
as articles for further manufacture in the manufacture or production 
of articles on the sale of which tax has been imposed under this title 
prior to such date. 

Sec. 607. Returns, Records, and Payment and Collection 

OF Tax 

(a) Every licensed manufacturer or registered dealer and every per- 
son liable for any tax under this title (other than tax under section 
601 (b)) shall make monthly returns under oath and pay the taxes 
imposed by this title to the collector for the district m which is 
located nis principal place of business, or if ne has no principal place 
of business m the United States, to the collector at Baltimore, Mary- 
land. Such returns shall be made on or before the last day of each 
month for the preceding month, and shall contain such information 
and be made in such manner as the regulations prescribe. 

Sec. 608. Evasion of Tax 

(a) Diversion of Articles Sold for Exportation.- — No article 
the sale of which has been exempted from tax under section 601 (a) 
(4) (relating to sales for exportation) shall thereafter be sold for use, 
or used, in the United States, unless the person so selling or using it 
pays the tax which would have been imposed on such sale if it had not 
been so exempted. 

(b) Tax on Sales to or Importations by Licensed Manu- 
facturers or Registered Dealers. — If the Commissioner finds 
that payment of tax under this title is being evaded or is likely to be 
evaded by a licensed manufacturer or registered dealer, or a class of 
licensed mauufacturers or registered dealers, he may require that the 



74 SALES-TAX DATA 

tax shall be imposed on the sale of any class of articles (even though 
articles for further manufacture or for resale to licensed manufac- 
turers as articles for further manufacture) to, or the inii)ortation 
thereof by, such licensed manufacturer or registered dealer, or class of 
licensed manufacturers or registered dealei's. Credit or refund of tax 
so imposed may be allowed on proof by a licensed manufacturer that 
such articles have been used as articles for further manufacture in 
the manufacture or production of articles on the sale of which tax 
has been ])aid, or by a i-egistered dealer that such articles have been 
resold to licensed manufacturers as articles for further manufacture. 
(c) Sale of Article Purchased as Article for Further 
Manufacture.— If a licensed manufacturer sells an article pur- 
chased or imported free of tax by virtue of his license he shall be 
liable for tax under this title in the same manner as if such article 
were an article manufactured or produced by him. 

Sec. 609. Tax on Manufacturer or Producer not Licensed 

xVny manufacturer or producer not licensed or required to be 
licensed under this title, who sells an article and adds to the price 
any amount as tax under this title, shall be liable for tax under this 
title equal to such anioimt; and any such person who sells an article 
at a price represented to include tax under this title shall be liable 
for tax under this title on such sale. 

Sec. 610. Contracts for Sale Entered Into Before ]\Iarch 1, 

1932 

If a manufacturer or producer required to be licensed under this 
title has, prior to March 1, 1932, made a contract with any other 
person for the sale, on or after the effective date of this title, of an 
article, which sale is taxable under this title, and such contract does 
not permit the adding, to the amount to be paid thereunder, of the 
wdiole of the tax imposed by this title, then the vendee shall be liable 
for so much of the tax imposed by this title as in not added to the 
contract price, and the vendor shall collect such amount from the 
vendee and account therefor to the United States, or in case of failure 
or refusal by the vendee to pay such amount to the vendor, the vendor 
shall report the facts to the Commissioner, who shall cause collection 
of such amount to be made from the vendee. 

Sec. 611. Final Agreements 

The Commissioner (or any officer or employee of the Bureau of 
Internal Revenue, including the field service, authorized in writing 
by the Commissioner) is authorized to enter into an agreement in 
writing with any person relating to the liability of such person (or of 
the person for whom he acts) in respect of the tax imposed by this 
title (including the basis or method upon which such liability shall be 
determined or computed) for any period (past or future) specified in 
such agreement. If such agreement is approved by the Secretary or 
the Undersecretary, w^ithin such time as may be stated in such agree- 
ment, or later agreed to, such agreement shall be final and conclusive, 
and, except upon a showing of fraud or malfeasance, or misrepresenta- 



SALES-TAX DATA 75 

tion of a material fact, (1) the case shall not be reopened as to the 
matter agreed upon, or the agreement modified, by any officer, em- 
ployee, or agent of the United States, and (2) in any suit, action, or 
proceeding, such agreement or any determination, assessment, col- 
lection, payment, abatement, refund, or credit made in accordance 
therewith, shall not be annulled, modified, set aside, or disregarded; 
except that in its application to sales made after the date on which it 
is approved or agreed to, such agreement shall be held to be modified 
to the extent necessary to conform to any change in the law after 
such date. 

Sec. 612. Effect of Changes in Administrative Decisions 

No amendment or revocation of any regulation, ruling, or decision 
of the Commissioner or Secretary (or any official authorized in writing 
by either of them to make rulings or decisions which shall be subject 
to this section), in force at the time of the sale of an article, shall have 
the eft'ect of increasing the liability of any person with respect to 
such sale beyond his liability determined in accordance with such 
regulation, ruling, or decision in force at the time of such sale. 

Sec. 613. Applicability of Administrative Provisions 

All provisions law (except criminal penalties) applicable in respect 
of the taxes imposed by section 600 of the Revenue Act of 1926, shall, 
in so far as applicable and not inconsistent with this Act, be applicable 
in respect of the tax imposed by this title. 

(b) The tax shall, without assessment by the Commissioner or 
notice from the collector, be due and payable to the collector at the 
time for filing the return. If the tax is not paid when due, there shall 
be added as part of the tax interest at the rate of 1 per centum a 
month from the time when the tax became due until paid. 

(c) Every licensed manufacturer and registered dealer, and every 
person liable for any tax imposed by this title, shall keep such records, 
render under oath such statements, and comply with such regulations, 
as the Commissioner with the approval of the Secretary may from 
time to time prescribe. Whenever in the judgment of the Commis- 
sioner necessary, he may require any person, by notice served upon 
him, to make a return, render under oath such statements, or keep 
such records, as the Commissioner deems sufficient to show whether 
or not such person is liable for tax under this title, and the amount 
of any such liability. All records required under authority of this 
section with respect to any sale shall be kept in such manner as to be 
readily accessible to the Commissioner or his agents for a period of 
four years from the date the tax with respect to such sale became due, 
unless the Commissioner authorizes the destruction of such records 
at an earlier date, or unless an agreement under section 611 determin- 
ing the amount of liability under this title with respect to such sale 
is approved by the Secretary or Under Secretary. 

(d) In case any person other than a licensed manufacturer or regis- 
tered dealer acquires from or against a licensed manufacturer or 
registered dealer, by operation of law or as a result of any transaction 
not taxable under this title, the right to sell any article, the sale of 

70095—42 -6 



76 SALES-TAX DATA 

such aiticlo by such i)erson shall be taxable as if made by such licensed 
manufacturor or registered dealer, and such person shall be liable for 
the tax. 

(e) If the Commissioner finds that a person liable for tax under this 
title designs quickly to depart from the United States or to remove his 
property therefrom, or to conceal himself or his property therein, or 
to do any other act tending to prc\iudico or to render wholly or partly 
ineirectual proceedings to collect taxes accrued under this title unless 
such proceedings be brought without delay, the Commissioner shall 
cause notice of sucli finding to be given such person, together with a 
demand for an immediate return and immediate payment of such 
taxes, and such taxes sliall thereupon become immediately due and 
payable. The provisions of section 146(b) and (c) of Title I (relating 
to "security for payment and exemption of taxpayer) shall be applicable 
with respect to this subsection. 

Sec. 614. Penalties 

Any person willfully violating any provision of this title or any 
provision of law, in respect of the tax imposed by this title, shall (in 
lieu of any other criminal penalty provick^d for therein) be fined an 
amount equal to one-half the amount of tax evaded or not paid or 
collected and accounted for (or if such amount can not be determined 
to the satisfaction of the court, or if no tax was evaded or not paid or 
collected and accounted for, then not more than $1,000), or imprisoned 
not more than six months, or both, together with the cost of prosecu- 
tion. 

Sec. 615. Exclusion of Tax From Gross Income 

If a licensed manufacturer or registered dealer includes in his gross 
income for income tax purposes, any portion of his gross receipts paid 
to the United States as tax under this title, he shall be allowed such 
amount as a deduction from gross income for income tax purposes; 
but no deduction in respect of such tax shall be otherwise allowed 
under section 23 (c) or (d) of Title I (Income Tax). 

Sec. 616. Regulations 

The Commissioner, with the approval of the Secretary, shall 
prescribe and publish such regulations as he may deem necessary for 
the enforcement of this title. 

Sec. 617. Definitions 

When used in this title- — 

(a) The term "article" includes commodities of every description, 
including gases and electricity, and also including any commodity used 
for producing power, heat, or light; but does not include real property. 

(b) The term "licensed manufacturer" means a manufacturer or 
producer licensed or required to be licensed under this title. 

(c) The term "registered dealer" means a dealer or importer regis- 
tered under this title. 

(d) The term "maiuifacturer" includes a printer, publisher, litho- 
grapher, engraver, photographer, and producer of motion picture films. 



SALES-TAX DATA 77 

(e) The term "manufacture or produce" includes fabricate, cure, 
tan, dress, dje, bleach, blend, can, mix, spin, weave, refine, and process 
or manipulate in any manner, but does not include repair, nor the 
cleaning or ginning of cotton nor the cleaning and threshing of grain, 
nor the preparation of food or beverages for consumption on the 
premises where prepared. 

(f) The term "article for further manufacture" means only an 
article (1) which is to be used in, wrought into, attached to, or^uscd 
as a covering or container for, an article to be manufactured or pro- 
duced for sale which will be subject to tax under this title, or (2) 
which is consumed in the process of manufacturing or producing such 
an article; but does not include plant equipment, machinery, and tools. 

(g) The term "United States" when used in a geographical sense 
mcludes only the States, the Territories of Alaska and Hawaii, and 
the District of Columbia. 

(h) The terms "imported" and "importation" mean, respectively, 
brought and bringing into the United States from any port or place 
outside thereof. 

(i) The terms "exported" and "exportation" mean, respectively, 
shipped and shipment to any place outside of the United States or 
laden and lading as bunker coal, other fuel supplies, ships' stores, 
sea stores, or legitimate equipment on vessels of war of any foreign 
nation, vessels employed in the fisheries or in the whaling business, 
or actually engaged in foreign trade or trade between the Atlantic 
and Pacific ports of the United States or between the United States 
and any of its possessions. 

(j) The term "farm products" means agricultural (other than 
forestry) products in the broadest sense, not processed (otherwise 
than by cleaning and ginning or cleaning ancl threshing) by any 
person other than the original producer thereof, or an association of 
surh producers, organized and operated on a cooperative basis. 

(k) The term "farmer" means a producer of farm or garden 
products. 

(1) The term "exempt article" means an article the sale or importa- 
tion of which is exempt from tax under section 602. 

_(m) The term "regulations" means regulations prescribed under 
this title by the Commissioner and approved by the Secretary. 

Sec. 618. Personnel 

The Secretary is authorized to appoint, in the office of the Assistant 
Secretary in Charge of Fiscal Offices, two officers at salaries of $9,000 
per annum, and in the Bureau of Internal Revenue, one Deputy 
Commissioner at a salary of $9,000 per annum, and, subject to the 
Classification Act of 1923, as amended, such other oflicers and em- 
ployees as are necessary to administer the provisions of this title. 

Sec. 619. Effective Date — Date of Expiration 

This title shall take efl^ect on the thirtieth day after the date of 
the enactment of this Act, except that sections 606, 611, 616, and 
618 shall take effect on the date of the enactment of this Act. No 
sale or importation after June 30, 1934, shall be taxable under this 
title. 



B. PROPOSED MANUFACTURERS' EXCISE TAX, WAYS AND 
MEANS COMMITTEE REPORT, 1932 

General fttatem en i 

MANUFACTTTRERS' EXCISE TAX 

After tiic increases in the income and estate taxes were tentatively 
agreed to by your committee, it was faced with the necessity of 
raising an additional $1,073,000,000. Exhaustive hearings were 
held, and it is b(>lieved that every conceivable source of revenue was 
investigated and consid(U'ed. A great many special taxes at com- 
parativ(>ly high rates upon selected industries, such as the automo- 
bile i]ulustry, the power industry, etc., were considered. In eacb 
case the representatives of the industry appeare<l before the com- 
mittee and made convinciag arguments showing the unjust discrimi- 
nations which would lesult from such taxes. After careful considera- 
tion your committee concluded to abandon this source of revenue 
and look elsewhere. 

Your committee leeommends that as a temporary measure to last 
only during the period of tlie prese]i.t enK^-gency, a ian.ufacturers' 
excise tax at a rate of 2% percent be levied upon all manufactured 
articles with a few specified exemptions, in('ludin.g an exemption of 
farmers and of staple food products, and an exemption of small manu- 
facturers. Such a tax Avill produce, it is estimated, $595,000,000 of 
revenue for the fiscal year 1933, and it is believed that this tax is an 
essential part of any program to balance the Budget for that year. 
The detailed provisions of this manufacturers' excise tax are fully 
discussed and the exemptions sec forth in the portion of the report 
under the heading "Title IV", and will not be further discussed here. 
There are a few major con.siderations in connection with this tax, 
however, which should be considered. 

It has been ai-gued tbat a general manufacturers' excise tax is unfair 
in that it imposes a biu'den upon the purchaser of necessities. Those 
who so argue propose in place of such a tax a tax on specified luxuries 
or a selective tax on certahi industries. A tax on luxuries, however 
sound in principle, will not meet the present need for revenue. No 
matter how high a rate were levied on such luxuries (assuming it 
were possible to agree as to what constitutes a luxury), it not only 
would not product^ the required revenue but would produce only a 
small fraction of it. As to a tax on certain selected industries, it has 
been pointed out above that such a tax involved unfair discrimination. 

Further it is argued by the opponents of a manufacturers' excise 
tax that it imposes a burden on the poor man and violates the prin- 
ciple of taxation in accordance with the ability to pay. There are 
two answers to this argument: First, a tax on a manufacturer at a 
2% per cent rate will be so small on a poor man, even assuming 
(which is not the case in many instances) that the entire tax is 
passed on to the consumer by the manufacturer, as to be negligible. 

78 



SALES-TAX DATA 



79 



Assume the case of a family which spends $2,000 a vear. Probably 
one-half of this amount would be spent on foodstuff exempt under 
the proposed tax The remaining one-half would probably be spent 
tor articles on which the manufacturers had paid a tax " However 
this does not mean that the individual would pav 2\i oer cent or 
$22.50 tax on his $1,000 of purchases, for the tax is levied on the 
manufacturers' sale price and not on the jobbers' or retailers' price 
Ihe manufacturers' sale price on many of the common commodities 
IS not oyer 70 per cent of the retail sales price, thus the tax burden 
on the individual would only be $15.75 for the year even if the tax 
were all passed on. If the tax were one-half absorbed by the manu- 
facturer the consumer would only pay $7.88. Surely this is no 
intolerable burden for him to bear in support of his country in these 
times of great stress. 

It should also be pointed out that the more one spends the f^reater 
his tax under this manufacturers' excise tax. The poor man with 
small hying expenses will pay much less than the wealthy man who 
lives m great luxury. And, in addition, there will be no avenue of 
avoidance for the wealthy of this tax such as tax-exempt securities 
attord lor the avoidance of the income tax. 

Furthermore, in the opinion of your committee, this manufacturers' 
excise tax will not be universally passed on to the consumer but in 
many instances will be absorbed by the manufacturer. It is impos- 
sible, of course, to anticipate with accuracy the extent to which such 
tax will be passed on and the extent to which it will be absorbed 
but It IS believed that in many instances the competitive condition 
withm the industry will result in the absorption of the tax by the 
manufacturer, and thus no burden will be imposed on the ultimate 
consumer. 

In considering this manufacturers' excise tax your committee has 
made a careful study of the effects and operation of a similar tax in 
Canada and other countries and has found that it has been most 
effective as a revenue producer and has occasioned little if any pro- 
test or opposition. A similar tax, at much higher rates, has recently 
been inaugurated m Australia with a favorable reception and with 
excellent results. 

Your committee submits that there is no other source of revenue 
which will yield the amount unperatively required with as little 
protest, as little annoyance, and as little disturbance to business as 
a manufacturers' excise tax. 



Detailed Rei)ort 
TITLE IV. MANUFACTURERS' EXCISE TAX 

The reasons which make necessary and advisable the imposition of 
a general excise tax on manufacturers have been discussed in the 
mtroductory statement . 

Briefly, a general manufacturers' tax, hi the opinion of your com- 
mittee, must meet six fundamental tests: 

, (1) The rate must be low, so that undue burdens will not be 
imposed. 

(2) Certainly, both as to liability and amount, must be attiiin;;ble 
m advance of the sale. 



80 SALES-TAX DATA 

(3) Pyramiding must be prevented. 

(4) The tax must be imposed uniformly and without discrimination. 

(5) The hiw must present the least possible number of difficult 
administrative problems (such as the questions of classification arising 
in connection with exemptions). 

(6) Adequate authority must be granted to assure a sour d, smoothly 
functioning, and flexible administration. 

Your committee believes that the manufacturer's excise tax it has 
adopted (title IV of the bill) adequately complies with each of the 
above tests; that the tax will be an effective revenue producer; and 
that it can be satisfactorily administered at a reasonably low 
comparative cost. 

Although each section of the title will be discussed in detail, it is 
believed that, even at the risk of duplication, a general discussion of 
the more essential features will prove of value. 

THE RATE 

Your committee recommends a rate of 2^ per cent. This rate is 
imposed (generally) upon the price at which the manufacturer or 
producer sells the commodity. Only through firm insistence upon 
the application of the tax to all commodities, with substantially no 
exemptions, was the committee enabled to recommend this rate. 
Every effort was made to adopt a rate of 2 per cent. This, however, 
proved impossible. 

Your committee must point out that any extension of the exemp- 
tions necessarily narrows the tax base, reduces the yield of the tax, 
and necessitates a correspondingly higher rate. It is believed that 
the proposed rate is as high as the circumstances in the United States 
will justify. Taxpayers seeking exemptions from the application 
of the tax should bear in mind that the granting of further exemptions 
means a shifting of the burden to other commodities — and in the last 
analysis the burden upon the ultimate consumer will not be lessened. 

CERTAINTY AS TO TAX LIABILITY 

It is essential that the persons who will be called upon to make 
returns and pay the tax to the Government must know, in advance of 
the sale, whether the sale is taxable and the amount of the tax lia- 
bility. Having ascertained the taxability of the sale and the basis 
upon which the amount of tax is to be computed, they must be able 
to rely upon the determination. Retroactive imposition of the 
tax, or change in the method by which the tax is computed, neces- 
sarily results in hardship and dissatisfaction, which in turn will bring 
about the breakdown of the tax. 

The bill assures the essential certainty by authorizing advance 
decisions, by preventing the retroactive application of changes in 
rulings and regulations, and by authorizing final closing agreements. 

ELIMINATION OF PYRAMIDING 

The imposition of several taxes with respect to any article, com- 
monly referred to as pyramiding, is effectively eliminated under the 
bill by a system of licensing. All manufacturers and producers (other 



SALES-TAX DATA 81 

than those whose gross receipts are less than $20,000) must be 
licensed. The bill then permits the sale of articles tax free from one 
licensee to another. Thus, the product of one manufacturer which is 
to be used as a material by a second manufacturer, passes through all 
stages of manufacture without the imposition of a tax. In this man- 
ner the tax is imposed but once — upon the final sale as a finished 
product entering the channels of consumption. 

In order that partly manufactured goods may pass, in the ordinary 
channels of trade, through wholesalers, dealers, or importers, the 
licensing system is applied also to persons of this class — referred to in 
the bill as "registered dealers." The limitation of the privilege of 
tax-free purchases by dealers to those articles which they are to 
resell to licensed ma;nufacturers for further manufacture is one of the 
important features of the bill. If, as in Canada, all wholesalers are 
allowed to be licensed and to make all their purchases tax free, the 
administrative burden of issuing licenses and supervismg licenses 
will be tremendous, and collection of the revenue will be greatly de- 
ferred, since few wholesalers will forego the privilege of postponing tax 
payment until they resell. Furthermore, the temporary nature of 
the tax will give rise to serious difficulties particularly in the proper 
collection of the tax after the termination of the law. The proposed 
plan will eliminate these undesirable aspects and confine the privilege 
and benefits of registration within the limits required to prevent 
disturbance of normal dealmgs m commodities which are supplied 
to manufacturers through dealers. 

UNIFORM APPLICATION OF TAX 

It is of utmost importance that the tax be imposed and administered 
imiformly and without discrimmation. Each member of a competi- 
tive group must pay upon substantially the same basis as all his 
competitors, even though his sales methods may differ. Conse- 
quently, the bill requires that every efiort be made to ascertam the 
manufacturers' or producers' price at the place of manufacture or 
production. In the case of those commodities which are ordinarily 
sold at wholesale, this price will be the price at which the manufac- 
turer sells to the wholesaler, even though the particular sale is at 
retail. This price may be established with respect to any particular 
sale or class of sales, for example, by existing wholesale prices, or by 
a system of discounts from retail prices, or by a building up from cost 
of production, whichever method may be the most practical. On 
the other hand, many commodities are not sold at "wholesale" — 
such as articles sold on specification or on special order. In cases 
of this kind, the tax is imposed upon the price at which the article 
actually is sold by the manufacturer. 

It is expected that the officials in charge of the administration of 
the tax will confer with representatives of each particular industry 
and with groups of taxpayers confronted with similar problems, and 
reach an agreement with them as to the methods by which the amount 
of their tax liability is computed. A principle agreed on in this 
manner should be applied uniformly to each member of the industry 
or group, whether or not he participated in the conference. Severe 
and justified criticism may be expected whenever one nuinufacturer 
is permitted to pay a lesser tax than his competitor. 



82 SALES-TAX DATA 

Hero, again, the matter of exemptions presents itself. Whenever 
an exem])tion is granted with respect to any particular article, the 
competing article must also be granted an exemption. Thus, the list 
of exemptions expands. And notwithstanding, unfairness and dis- 
crimination will appear, by reason of changes in competitive condi- 
tions, or by reason of our failure to consider or appreciate fully 
existing competitive conditions. 

AVOIDANCE OF ADMINISTRATIVE DIFFICULTIES 

A general sales tax may, unless every precaution is taken, involve 
so many administrative problems almost impossible of solution that 
it will fall of its own weight. Your committee has made every effort 
to avoid the imposition of administrative problems of this kind. It 
believes, however, that a word of caution is justified, in order that 
problems of this nature may be avoided during the enactment of 
the bill. 

Again, the matter of exemptions is a typical illustration. If addi- 
tional exemptions are made, an agency sunilar to the Customs Court 
will be rec[uired to determine upon the proper classification of articles. 
Obviously, the decisions will require time. The imposition, retro- 
actively, of tax liabilities will follow. Businesses wnll be ruined. 
And the tax will become unbearable. 

ADEQUATE ADMINISTRATIVE AUTHORITY 

Innumerable situations arise which can be met only by administra- 
tive determination. This determination must be made upon a sound 
and fair basis. Taxpayers must have confidence in the administrative 
officials. The administrative officials must cooperate with the tax- 
payers. Hesitancy or refusal to assume responsibility will be fatal. 
Decisions must be made without delay. Increases in tax liability 
with respect to sales already made must be avoided. Promptness, 
certainty, and finality must be attained. 

Your committee is confident that the bill gives adequate power to 
assure these results. 

SCOPE OF TAX 

In order to spread the incidence of the tax over the broadest 
possible field, the "articles" on the sale or importation of which the 
tax is imposed are defined in section 617 to include commodities of 
every description, that is, ev(n-ything movable that is bought and 
sold — goods, wares, and merchandise of all kinds. It is not limited 
to the ordinary concept of "article" but includes such intangible 
substances as natural or artificial illuminating gas and gases (such as 
helium) used for other purposes. Even air in a processed and salable 
form, such as compressed air in tanks, will be taxable. The definition 
also covers electricity and any other kind of power in a form in which 
it is susceptible of sale. Services, such as telephone and telegraph, 
are not proper subjects of a manufactiu-ers' tax and are not included 
in this tax, but those mentioned are taxed under Title V. Since 
buildings are not within the concept of manufactured articles, real 
property is excluded. This means that tax will bo collected upon 
materials and fixtures going into the building or used in buildnig opera- 



SALES-TAX DATA §3 

tions, and not upon the value of the completed building. Boats, ships, 
and aircraft are within the definition. Articles produced for the use of 
the manufacturer or producer are included. 

Section 601. Imposition of Tax 

This section provides for the imposition of the tax upon the sale of 
every article sold in the United States by the manufacturer or pro- 
ducer thereof, except manufacturers or producers exempt from licens- 
ing under section 606, with the exceptions necessary to prevent pyra- 
miding and those required by the Constitution. The first class of 
exceptions provides for tax-free transfers between licensed manu- 
facturers of articles for further manufacture. These transfers may be 
direct, or through an unlicensed or unregistered person if delivery is 
direct from the first manufacturer to the other. This last provision 
will relieve some dealers in articles for further manufacture from the 
necessity of being registered, and will therefore simplify administra- 
tion of the law. Licensed manufacturers are allowed to sell to regis- 
tered dealers, free of tax, articles to be resold to licensed manufacturers 
for further manufacture. Sales for exportation and sales made directly 
by manufacturers to States and political subdivisions thereof, and 
agencies thereof, for governmental purposes, are exempt for con- 
stitutional reasons, but sales to the United States, the Territories, 
and the District of Columbia will be taxable. 

Subsection (b) provides for the imposition of tax at the same rate 
on the duty-paid value of imported articles, with the exemptions 
necessary to prevent pyramiding, and the constitutional exemption 
in favor of the States. Customs duties (but not internal-revenue 
taxes collected on importation) are added to the dutiable value in 
order to give a basis for the tax corresponding to the domestic manu- 
facturer's sale price. Provision is made for the collection of the tax 
in the same manner as a customs duty. This is believed to be the 
most certain and the simplest way to collect the tax on imports, since 
all imported articles are handled by the Customs Service for customs 
purposes. For the Internal Revenue Service to collect the tax either 
at the time of importation or after the articles enter the commerce of 
the country would occasion confusion and duplication of effort. This 
plan also makes applicable the regulations governing mail importa- 
tions, the procedure governing the handling of passengers' baggage, 
the $100 exemption of returning residents, the warehousing and trans- 
portation-in-bond privileges, the right to review by the customs courts 
of questions of law and valuation, and the usual entry procedure. 
The burden on the customs service will be lessened by the exemption 
from the tax of articles for further manufacture imported by licensed 
manufacturers and registered dealers, since a large proportion of 
imports, and especially of the duty-free goods, are in this class. 

Provision is made that the heavy additional duties imposcxl untk^r 
section 489 of the tariff act of 1930 in certain cases of undervaluation 
shall not apply by reason of the imposition of this tax to an article 
otherwise free of duty or subject only to a specific duty; that articles 
in warehouse on the efl"ective date of the tax shall not be subjected to 
the tax; that drawback of the tax (except of the tax on imported oil) 
shall not be allowed on the exportation of articles manufactured or 
produced from imported articles, since the bill provich^s for credit or 



84 SALES-TAX DATA 

refund in such cases; and that treaties such as the Cuban reciprocity 
treaty, and provisions of law exempting pro(hicts of the various insular 
possessions from duty, shall not be applicable with respect to the tax. 

Certain connnodities taxable under the bill, such as electricity, 
which enter the United States from foreign countries, are not suscep- 
tible of customs treatment. Authority is given the Secretary to pro- 
vide for the collection of the tax in such cases in the same mannei" as 
in the case of domestic commoditi(>s. 

As a necessar}^ supplement to the yield of the general tax, subsec- 
tion (d) provides special higher rates on a limited number of articles. 
The grades of lubricating oil taxed at the rate of 4 cents a gallon are 
those suitable for use in internal-combustion engines. 

In the case of imported petroleum and products thereof, a special 
tax of 1 cent a gallon is imposed. This tax is to be collected even 
though the merchandise is imported for further manufacture, the 
product of which will be taxable, but under subsection (c) drawback 
will be allowed on the exportation of products refined or manufactured 
from such imported merchandise. 

The special rates under this subsection, it is estimated, will yield 
$80,000,000 during the fiscal year 1933. 

Subsection (e) provides that exemption of sales from tax shall be 
granted licensed manufacturers and registered dealers only when they 
comp'y with the regulations. This permits a flexible system of rules 
governmg procedure and proof of right to exemption which will sate- 
guard the revenue, with a minimum of trouble and expense to licensed 
m.anufacturers and registered dealers. 

Section 602. Exempt Articles 

This section grants exemption from the tax to a limited number of 
commodities. For administrative reasons it is not desirable to require 
the licensing of farmers, with respect to their farm or garden products. 
"Farm products" is given a broad definition in section 617, to include 
all plant and animal products useful to man except forestry products, 
but not such products when they have been processed by any person 
other than the original producer or a cooperative association of such 
producers. An exception is made in the case of the cleaning and 
ginning of cotton or the cleaning and threshing of grain, m order to 
remove every possibility that buyers, if subjected to the tax, might 
attempt to force tlie tax upon the growers. Livestock and products 
thereof, as well as plant products, are covered by the definition. 
The loss of revenue by reason of the exemption of farm and garden 
products will be largely offset by the tax which wih later be collected 
on articles manufactured tiierefrom. Exemption is also granted in 
the case of fertilizers and seeds and feeds for livestock and poultiy. 
For administrative reasons, these exemptions are made dependent 
on the cliaracter of the commodity rather than ultimate use. 

Your committee believes that sound policy requires the exemption 
of the essential foodstuffs. Accordingly, meat, fish (including shell- 
fish), and poultry will not be taxed if fresh, dried, frozen, chilled, 
salted, or in brine. Cooked, cured, smoked, or canned meats, fish, 
and poultry will not be exempt, but cleaning, dressing, slicing, grind- 
ing, etc., will not deprive these articles of the exemption so long as 
they remt'in within the description of the paragraph. Bacon, hams, 



SALES-TAX DATA 85 

pig shoulders, and pig jowls are specifically exempted, although 
smoked or cured. The other food exemptions are butter, oleomar- 
garine, and other butter substitutes; cheese; milk and cream in any 
form (including fresh, pasteurized, dried, powdered, or condensed, 
but not products of milk, such as ice cream and malted milk) ; eggs in 
the shell; bread (which term does not include biscuits, wafers, and 
crackers) ; flour and meal made of grain (including only true flours 
and meals, not such things as oatmeal), and semolin.a; and sugar, 
salt, tea, and coffee. These exemptions of foodstuffs are similar ia 
scope to those provided for by the Australian law. 

Products already taxed under the internal revenue laws are ex- 
empted from this tax, but nonexempt materials used in their produc- 
tion will be taxed. Water sold by public-service companies or 
otherwise (but not bottled water) is free of tax. Newspapers, 
magazines, and other perio icals would present difficult administra- 
tive problems, and have been exempted with the expectation that 
the tax on the paper, ink, and other materials used in their manu- 
facture will yield as much revenue as would a tax based on wholesale 
prices for the completed publications, if not more. Books for the 
blind, educational textbooks, and Bibles are exempted. Exemption 
is also granted to certain articles for religious and devotional pur- 
poses and for use in chuiches. To avoid the administrative diffi- 
culties inherent in classifications dependent on ultimate use, the 
exemption in favor of articles for churches is restricted to those 
manufactured exclusively for such use, and articles suitable for other 
uses, although they may be used in churches, or are sold for such 
use, will not be exempt. 

Section 603. Tax on Registered Dealers 

Articles purchased or imported by registered dealers, free of tax, as 
articles for further manufacture to be resold to licensed manufacturers, 
may be diverted to other channels, either with intent to evade the 
tax or by reason of unforeseen business contingencies. In such cases 
the bill provides that the registered dealer shall pay the tax which 
would have been imposed on his purchase or importation if he had 
not received the exemption. Since registration is a privilege extended 
to dealers, this section very properly places the burden upon registered 
dealers to satisfy the commissioner as to the disposition of articles 
purchased free of tax, and provides that if a registered dealer fails to 
sustain the burden, he shall pay the tax on the articles concerned. 

Subsection (b) authorizes the commissioner to provide in certain 
cases a more elastic system which will permit registered dealers to 
establish their proper liability without tracing individual articles. 
An inventory system, for example, might be prescribed, under which a 
registered dealer's liability will be discharged when he has sold to a 
licensed manufacturer a quantity of like articles equal to the quantity 
purchased tax free. 

Section 604. Sale Price 

Section 604 provides rules for determining the sale price which is 
the basis of the tax. In general, this should be the manufacturer's 
or producer's price at the factory or place of production. This means 
that charges for coverings and containers and charges incident to 



86 SALES-TAX DATA 

preparinir the article for shipmciU or dolivcry sliouhi he included, 
\vliil(> transportation, dclivory, insuranci', and like charges should be 
excluded. To avoid administrative difficulties, however, the bill 
])rovi(les that these charges may be excluded only if the invoices or 
other records of the seller establish the amount to the satisfaction of 
the commissioner. The amount of tax under this title is to be ex- 
cluded. 

It is not intended to i'(>quire the tax to be se})arately charged. If 
no s(>parate charge is made, the tax is to be presumed to be included. 
For (example, the invoice may s])ecify the charge for the merchandise 
as $100, plus $2.25 foi- the manufaclui'ers' tax, or it may simply state 
the charge as $102.25 foi- the merchandise, and in either case the manu- 
facturers' tax will be $2.25. This has been found in Canada to be the 
most workable plan and the fairest to industry in general. 

Provision is made in various cases that the tax shall be on the "fair 
mannfacturei's' price," which under subsection (h) is the price for 
which manufacturers or producers of like articles would ordinarily 
sell the article — in short, the normal factory price — as determined 
by the commissioner. 

Under subsections (b) and (c) the fair manufacturer's price will 
be the basis in the case of sales on consignment, whore the amount 
charged by the consignee does not represent factory price, and retail 
sales by licensed manufacturers, where an adjustment to obtain the 
normal factorj^- price is obviously necessary. This adjustment has 
been left to the commissioner for the reason that the manufacturer 
may have no sales at wholesale, or his wholesale sales may be made 
at various prices or at an unfair price, although in most cases there 
will be a bona fide wholesale price which can be accepted. In the 
case of any article made to order or on specification, of a character 
which is not usually sold at wholesale, no adjustment of the actual 
sale price is allowed. 

In the administration of the provision with respect to retail sales, 
it is expected that the commissioner will be able to make agreements 
on the sam(> basis with all manufacturers m a given industry, as to 
the method of arriving at the basis for the tax. This will eliminate 
the discrimination in the operation of the tax between competitive 
manufacturers which would inevitably result if the statute compelled 
the use of the actual retail price, or if it provided an inflexible rule 
for determinmg the fair manufacturer's price. 

One of the most difficult problems in the administration of the act 
may be encountered in its application to gas and electricity. Each 
is produced and sold upon bases pecuhar to the industry. Prices 
are dependent upon place, use, quantity, and time. Distribution 
costs normally absorb a much greater percentage of gross income than 
cost of production, and naturally are subject to infinite variables. If 
comisetition is to be unafi^ected and if unequal burdens are not to be 
imposed upon communities or classes, the tax must be measured by 
and computed upon a reasonably constant and nondiscriminatory 
base. The provisions of the bill in this respect are adequate. The 
tax wall be imposed upon the producers' price at the place of produc- 
tion or generation. In many cases tliis price can be fairly arrived at 
from actual sales. In other cases (for example, where electricity is 
generated and sold only for domestic use), it will be necessary to con- 
struct the price basis, probabl}^ b}^ a method of discounting from the 



SALES-TAX DATA g7 

actual prices at which sold, by adopting prices of other producers, by- 
reference to rate schedules, or by building up from cost of production. 
In each case, however, the tax should be imposed upon the producers' 
price^ — that is, cost of production plus a reasonable (and uniform) 
return upon the value of the properties devoted to production. 

Under subsection (g) the fair manufacturer's price is used as the 
basis in certain special cases. First, a manufacturer may use in liis 
own business, otherwise than as an article for further manufacture, 
articles manufactured or produced by liim or purchased tax free, and 
should be taxed on such use. For example, a manufacturer may make 
his own macliinery and equipment, or a railroad may generate its 
electric power in its own plant, or a manufacturer may pamt his bidld- 
mgs with paint purchased tax free for use on liis product. Second, 
gifts and free distributions are covered. Tliird, provision is made for 
transactions in which, by reason of the relationship of the parties, 
the price charged does not represent a fair value arrived at by an 
arm's-length sale. For example, a manufacturer may transfer liis 
product to a selling agency controlled by him, at a bookkeeping price 
below market value. Or a manufacturing corporation may sell plant 
equipment to an affiliated concern at an arbitrary price. It is essen- 
tial that in such cases the tax be imposed on the same value as in 
the case of similar sales between independent parties. 

The section also provides for an equitable method of imposing the 
tax on each payment in cases of installment and conditional sales, 
leases and royalties, and manufacture under contract. 

Section 605. Overpayments, Credits, and Refunds 

In order to minimize claims for refund, and as a matter of fairness 
to the taxpayers, this section provides that a taxpayer entitled to a 
refund may take credit of the amount against a later return. 

Under subsection (a) refund or credit may be allowed in cases where 
articles bought by a licensed manufacturer for further manufacture 
have passed through the hands of a person not licensed or registered 
and tax has been paid; when a manufacturer or producer who becomes 
licensed, and will thereafter be taxable on his product, has on hand 
tax-paid materials; when tax has been paid with respect to articles 
exported; and when the sale price has been readjusted after the sale. 
This last provision covers readjustments such as cash or quantity 
discounts, credit for return of goods or containers, and any othei" bona 
fide rebate or allowance amounting to a change in the sale price. 
No provision is made with respect to bad debts, which do not in fact 
constitute a rescission of the sale or readjustment of the price, and 
should be covered by the manufacturer himself, either by a reserve 
for bad debts or otherwise. 

Subsection (b) requires, as a condition precedent to credit or refund, 
compliance with such regulations as to proof and procedure as may 
be prescribed. 

Subsection (c) proliil)its interest on credits and refunds, whetlun- 
allowed or made administratively or piu'suant to a judgment of a 
court. This is desirable to discourage delay in claiming credit or 
refund and to discourage litigation. Your committee sees no reason 
why the Government should pay 6 pen-cent inter(>st on amounts tax- 
payers have erroneously paid in. 



88 SALES-TAX DATA 

Subsection (d) prohibits double allowance in those cases (for 
example, exportation of imported merchandise not conforminf^ to 
sample or specification and exportation of imported merchandise 
from bonded warehouse) in which the customs laws allow drawback 
or remission. This provision will allow taxpayers to elect the most 
convenient procedure. 

Subsection (e) is an important and just provision whicli will 
encourage agreements by taxpayers and discourage litigation. In 
many cases the tax will be passed on to consumers. No manufacturer 
or dealer should be permitted to recover an overpayment which in 
fact has been borne by the purchasers. Provision is therefore made 
against credit or refund of overpayments unless the taxpayer can 
show that he has not passed on the tax or that he has reimbursed the 
ultimate purchaser or obtauied his consent. 

Section 606. Licensed Manufacturees and Registebed Dealers 

Section 606 provides for the licensing of manufacturers and pro- 
ducers and the registration of dealers and importers. 

Farmers are exempted from licensing. Small manufactm-ers and 
producers, with gross sales of less than $20,000, are exempted to lessen 
the great administrative burden which would be occasioned by licens- 
ing them. While these exempt manufacturers and producers will 
not pay tax on the value of their finished product, tax will be imposed 
on the taxable materials sold to them by licensed manufacturers for 
use in the product. 

The most practicable yardstick for this exemption is sales for the 
preceding year, and a manufacturer whose sales for any year are more 
than $20,000 will be required to be licensed for all the next year 
regardless of any decrease in his business. Provision is made for 
cases in which a new business is commenced or in which there is an 
increase in the volume of business of a manufacturer who has been 
exempted. 

The registration of dealers (including importers) is restricted to 
those supplying articles for further manufacture to licensed manu- 
facturers. It is believed that a fee of $100 is justified for this regis- 
tration, in view of the additional administrative work occasioned by 
registration of dealers, but an option is given them of paying a fee 
of $2 and posting a bond sufficient to safeguard the revenue. In the 
case of a dealer doing a business of any considerable size, it will 
probably be less expensive and more convenient for him to pay the 
$100 fee than to post the bond, and it is believed that the fees in the 
aggregate will afTord the Government at least as much protection 
against loss. It should also be pointed out that the registered dealer 
will save interest on the tax he would otherwise have to pay on his 
purchases and which would not be refundable until his resale, and this 
interest will in many cases amount to much more than the fee. The 
difference in the fees for manufacturers and for wholesalers is justified 
by the fact that registration is optional for wholesalers and an advan- 
tage to them, while the licensing of manufacturers subject to the tax 
is compulsory. 

Provision is made for cancellation and revocation of dealers' regis- 
trations, and for collection from registered dealers on expiration, can- 
cellation, or revocation of registrations, and on the expiration date of 



SALES-TAX DATA §9 

the tax, of tax which would have been payable on articles which they 
have purchased under their exemption and have not resold. This is 
necessary because after a dealer ceases to be registered he is not sub- 
ject to supervision and tax, and might escape tax properly due on 
articles purchased by him free of tax. 

Provision is also made that when a manufacturer or producer 
becomes exempt from licensing, so that his sales will no longer be 
taxable, he shall pay the tax on all articles for fm-ther manufacture 
purchased under his exemption which have not gone into the manu- 
facture of articles on the sale of which he has paid tax. The con- 
verse of this, when an unlicensed manufacturer becomes licensed, is 
covered in the provisions for credit and refund. 

Section 607. Returns, Records, and Payment and Collection 

OF Tax 

Section 607 makes provision for returns, records, and payment and 
collection of the tax. All records are required to be preserved for 
the period during which the tax may be assessed, unless destruction 
is authorized by the commissioner or liability is finally settled. 

Subsection (d) makes provision for tax on sales by transferees by 
operation of law, such as assignees in bankruptcy, and persons who 
acquire articles tlirough other nontaxable transactions, who would 
otherwise be able to sell free of tax articles the sale of which by the 
manufacturer would have been taxable. 

Subsection (e) provides for early assessment when delay might 
jeopardize collection of tax. 

■ Section 608. Evasion or Tax 

Subsection (a) of section 608 makes liable for tax any person divert- 
ing to domestic use or sale any article sold free of tax for exportation. 

Subsection (b) gives the commissioner authority to safeguard the 
revenue by providing for collection of, the tax on sales to licensed 
manufacturers or registered dealers of articles for further manufac- 
ture, and crediting or refunding such tax only when it is shown that 
such articles have been properly used or resold to a licensed manufac- 
turer for further manufacture. This provision will be especially use- 
ful in its application to cases in which manufacturers use the' same 
article sometimes in furth<?,r manufacture and sometimes othenvise — 
•for example, paint which might be used on the product or might be 
used on the manufacturer's buildings or resold by him. 

Subsection (c) imposes the tax when licensed manufacturers resell 
articles which they have purchased free of tax under a representation 
that they are articles for further manufacture. 

Section 609. Tax on Manufacturer or Producer Not Licensed 

It may happen that a manufacturer or producer exempt from 
licensing and therefore not taxable on his sales will take advantage 
of the passage of the law to add to his selling price an amount which 
he represents to be a tax imposed by this title upon his sale. This 
section will make any such manufacturer or producer liable to tax on 
such sales. 



90 SALES-TAX DATA 

Section UK). Contracts for Sale Entered Into Before March 

1, 1932 

A inamifactiircr or producer who iiiado a contract before the date 
(Marcli 1 has been specified) on whieli he should reasonabl}^ have 
foreseen this tax and pi'otected liiniself against it, shoukl not be 
forced to bear the tax himself when the contract does not allow the 
price of the articles sold to be increased. This section provides that 
in such cases the purchaser shall be liable for the tax, which will 
ordinarily be collected from him and paid over to the Government 
by the seller. 

wSection ()11. Final Agreements 

Certainly in the application of this tax is essential, since manu- 
facturers must know, when they sell, the amount they must inc ude 
in the price to cover the tax. It is believed that questions as to tax 
liability, particularly such points as the percentage of adjustment of a 
retail price to arrive at fair manufacturer's price, can be agreed upon 
in advance by the Government and the manufacturer, so that the 
manufacturer will not face the alternative of risking a loss or over- 
charging his customers, and so that litigation may be avoided. Pro- 
vision is made for finality of such agreements. This provision is vital 
to the administration of a tax such as this, which can only operate 
justly when uncertainty is eliminated before the manufacturer sells. 

Section 612. Effect of Changes in Administrative Decisions 

For the same reasons given with lespect to the preceding section, 
this section enables manufacturers to rely on administrative reguh:- 
tions, rulings, and decisions by providing that reversals of such 
regulations, rulings, and decisions shall not have retroactive effect. 

Sections 613 and 614. Applicability of Administrative 
Provisions — Penalties 

The necessary administrative provisions of law are made applicable 
by section 613. Since this tax is collected monthly and the rate is 
low, so that large amounts will not be involved, section 614 provides 
that in the case of violations with respect to this tax there shall be 
imposed, in lieu of the severe criminal penalties specified in some of 
the general provisions, a more reasonable penalty proportionate to 
the amount of tax involved. 

Section 615. Exclusion from Gross Income 

When a manufacturer sells at a tax-included price, his gross receipts 
will not reflect his true gross income, and this section allows him in 
such cases to deduct the amount included in gross income which 
represents the tax. To preclude any possibility that purchasers 
might claim a deduction on the ground they have actually borne the 
tax, deduction on account of the tax is prohibited (>xcept as above 
specifically provided for. 



SALES-TAX DATA gi 

Section 616. Regulations 

This section is designed to give the commissioner (with the appfoval 
of the Secretary) broad authority to prescribe the regulations which 
he finds necessary m the admmistration of the act. 

Section 617. Definitions 

The definition of ''article" has been explained in the introductory 
statement under the heading ''Scope of the tax " ^i^oiory 

Subsection (d) enumerates certain persons who shall be considered 
manufacturers. These are not, however, the most doubtful cases 
which can arise, and It is not intended to indicate that any other 
person is not included. ^ 

Subsection (e) is intended to give the broadest possible scope to 
the term manufacture or produce," so that no one processing or 
manipulating an article, no matter how slightly, will escape classifica- 
tion as a manufacturer or producer. Exemption of the cleaning and 
ginning of cotton and the cleaning and threshing of grain is provided 
tor to avoid unfair operation of the tax with respect to original pro- 
ducers of cotton and grain, who might be forced by purchasers to 
bear the burden of the tax if the purchasers had to pay it by reason 
of such mampulation. The preparation of food in hotels, restau- 
rants, etc., and of drinks at soda fountains, drug stores, etc., is not 
properly within the scope of a manufacturers' tax, and such process- 
ing is excepted. All persons so exempted from treatment as manu- 
facturers or producers will of course bear the tax in the price of 
materials they purchase. The provision will not exempt the prepara- 
tion or manufacture of food and beverages otherwise than for imme- 
diate service. Repairing, laundering, refrigerating, repacking, sort- 
ing and other operations which do not change the article, are not 
witmn the meaning of manufacture or produce, but any process 
which changes the condition of the article— for instance, even the 
fast freezing processes— regardless of the slight extent of the 
change or the relative insignificance of the value added by the process 
to the value of the article, will be regarded as a manufacture or pro- 
duction. A number of processes are enumerated in the definition to 
indicate Its scope, but it is not intended that any inference should be 
drawn that any process not named is not covered 

Subsection (f) defines "article for further manufacture" so as to 
include anything (such as fuel and chemicals) consumed in the pro- 
duction of an article or becoming a part of a finished article or a 
covering or container for it, when the sale of the article is taxable 
riant equipment, machinery, and tools, although their cost enters 
into the cost of the product, are not exempted from tax as articles 
lor further manufacture, shice their long life takes them out of the 
class ol ordinary materials and supphes. The term. does not extend 
to articles used by small manufacturers who are exempt, or to articles 
used by manufacturers of articles specifically exempt, who can buy 
tax tree only such materials and supplies as are specifically exempt 

Subsection (i) gives the benefit of tax-free purchase of supplies to 
ships ol certain classes which are likely to touch at foreion ports 
It IS not believed that the tax should apply in such a manner as to 



70095 — 42 7 



^92 SALES-TAX DATA 

give an advantage to foreign manufacturers in competition with 
domestic manufacturers. 

The definition of "farm products" is explained in connection with 
section 602. 

Section 618. Personnel 

This section authorizes the appointment of necessary additional 
personnel. It is miportant that adequate appropriation be made 
for the administration of the act. The cost of collection in propor- 
tion to yield will in any event be low, and an attcm.pt to keep the 
cost too low will undoubtedly be false economy both from the 
standpoint of the revenue and of the businesses affected by delay, 
inefficiency, or uncertainty in the administration of the tax. 

Section 619. Effective Date — Date of Expiration 

This section postpones the effective date of the tax for 30 days 
after the enactment of the act. Exception is made of certain sections 
so that licenses may be issued in advance, so that agreements with 
taxpayers may be made in advance, so that regulations may be pub- 
fished at an early date, and so that the administrative organization 
may be set up as soon as possible. Provision is made that the tax 
shall cease to be in effect at the close of the fiscal year 1934. The 
tax is an emergency measure and assurance should be given the 
country that it is not intended to remain permanently in force. 



Part V 

FOREIGN SALES TAX DATA 



93 



THE BRITISH PURCHASE TAX ' 

(A) GENERAL STATEMENT 

It was not until the fall of 1940 that the British adopted a general 
sales tax as a part of their internal revenue system. Prior to that 
time, the British had relied upon the income and estate taxes, a selected 
list of excises, and customs to produce the required revenue. 

In September 1940, the British imposed what is known as a pur- 
chase tax. The first return covered the period from October 21, 1940, 
to December 31, 1940, and was required to be rendered not later than 
January 10, 1941. The following quotation is taken from Staples on 
the purchase tax: 

As its name implies, the tax is a tax on purchases, but it is obvious that collection 
could be made at any one of many stages which arise between the production of 
goods and their ultimate disposal by the retail trader. It is important for the 
revenue to ensure that collection takes place at the stage which will be the most 
convenient from the revenue's point of view (in order to minimize the collection 
costs and administrative difficulties), but which will, at the same time, afford 
the least opportunity for avoidance by unscrupulous taxpayers. The tax is 
therefore normally charged at the time when the goods are sold by the whole- 
saler to the retailer and the wholesaler is reponsible for the payment of the tax. 

(B) REVENUE RECEIPTS 

For the fiscal year ending March 31, 1941, the purchase tax yielded 
£26,261,058. Translated in terms of a conversion unit of £l which 
equals $5, this yield will amount to $105,044,232. Since the tax did 
not become effective until the later part of October, this represents 
a yield for a period of less than six months. For the fiscal year ended 
March 31, 1942, it was estimated that the tax will yield £110,000,000 
or $440,000,000. While no figures have as yet been published by the 
British Treasury as to the actual amount collected during the first 
part of the fiscal year ended March 31, 1942, it is stated by the London 
Economist of January 3, 1942, that collections are running well ahead 
of estimate. 

(e) PERSONS TAXABLE 

The persons who are required to pay the tax are wholesale mer- 
chants and manufacturers who deal in goods subject to the tax. A 
wholesale merchant, under the act, is defined as an^^ person who carries 
on in the United Kingdom a business of selling by wholesale chargeable 
goods bought by him, and includes a person who carries on in the 
United Kingdom the business of selling his chargeable goods as ma- 
terials to manufacturers. Chargeable goods will be regarded as manu- 
facturers' materials if some process is applied to tliem by manufac- 
turers in the course of making their products or if they are parts of, or 
accessories for, the manufactured articles. A person is considered to 

• Sources: Purchase Tax by Ronald Staples, London, 1940; London Economist, January 3, 1942; British 
and Canadian Tax Systems, Joint Committee on Taxation, 1941. 

95 



96 SALES-TAX DATA 

be a manufacturer if his business consists of making chargeable goods 
or of applying any process in making any goods or in assembling any 
parts of the goods made. An exception is made in the case of per- 
sons whose gross receipts from the sale of chargeable goods do not 
exceed £2,000 or $8,000 per year. Such persons are not required to 
register or pay taxes. The tax is passed on to the purchaser (usually 
retailers) who, in turn, pass the tax on to the consumer by means of an 
increase in the noiinal sales price of the goods. Steps are taken to 
prevent the retail trade from making a profit out of the tax by requir- 
ing the retail price to be increased only by the amount of the tax. 
The seller is required to add to the invoice which he delivers to the 
buyer in connection with the sale a statement showing the amount 
due for the tax for which the seller is required to pay. A retailer pur- 
chasing taxable goods is thus in a position to know the amount of the 
tax payable on all of his purchases, and can allocate the tax between 
the various classes of goods. 

Relief is granted where a contract for the sale of the goods was 
entered into before the date of the act. In general, the seller is en- 
titled to recover the tax from the buyer where the purchase price did 
not include the amount of the tax. 

When chargeable goods are imported from abroad for home use, the 
person accountable for the tax is the person by whom, or on whose 
behalf the goods are entered. If, however, the goods are imported by a 
registered person who intends to use the goods as stock for his business 
the tax is not chargeable at the time of entry of the goods into the 
country but on their ultimate sale by the registered person. One 
registered person is not entitled to acquire chargeable goods from 
another registered person without the addition of the tax to the price 
of the goods, but the tax must be accounted for by the first registered 
person when he himself disposes of the goods to an unregistered concern. 

The acquisition of chargeable goods by a registered wholesale mer- 
chant for the purpose of his business will not amount to a chargeable 
purchase since the tax is only chargeable thereon when the goods are 
disposed of by him. For the same reason, the purchase of chargeable 
goods from one retailer by another is not a chargeable purchase as the 
goods will bear the tax when acquired by the first retailer from his 
wholesaler merchant. 

(d) tax base 

The tax applies to chargeable goods which are set forth in the 
seventh schedule of the purchase tax. 

There are three categories: 

First. Goods which are chargeable at the basic rate. This rate is 
33 K percent of the wholesale value of the chargeable goods, which is 
said to represent a tax equivalent to about 24 percent of the retail 
price. The goods falling within tliis classification are regarded as 
luxuries, goods which may await normal times for replacement, and 
goods of a nonessential character. Examples of goods of this type are 
furs, real silk, lace, china, perfumes, carpets and rugs, musical instru- 
ments, jewelry, sculpture and other goods which do not require 
frequent replacement. 

Second. Goods which are chargeable at the reduced rate. This 
rate is 16% percent of the wholesale price, which is said to represent 
a tax equivalent to about 12 percent of the retail price. It applies to 



SALES-TAX DATA 97 

goods which are not in the category of luxuries, such as adults* 
clothing, boots, shoes, newspapers, periodicals, and so forth. 

Third. Goods which, although included in the general classifica- 
tion, are exempt as essential to the welfare of the community. This 
includes children's clothing, and footwear, protective helmets, sanitary 
ware, household brooms and brushes, essential drugs, and ambulances. 

Where parts of the articles in the schedule of chargeable goods are 
sold separately, they will not themselves be chargeable goods unless 
mentioned separately in the schedule. For example, while motor cars 
are chargeable goods, spark plugs are not chargeable with the tax, but 
electric lamps are chargeable. 

Where a general heading is given in the schedule, such as requisites 
for sports, all types of articles covered by the general heading are 
chargeable goods. 

The Treasury is given power to issue lists from time to time more 
particularly defining goods specified in the schedule. Drafts of these 
lists must be laid before the House of Commons before they are issued 
and will not be effective if disapproved by resolution of the House- 
within 28 days. 

The act applies only to the goods generally or specifically described 
in the attached schedules. Therefore, rents and savings are not 
taxed. Neither is food, coal, gasoline, tobacco or liquor. These 
last three commodities are subject to heavy special excise taxes. At 
the time the purchase tax was proposed in September 1940, it was 
estimated that only about 20 percent of the cost of living would be 
affected by the tax. The schedule is as follows: 



98 



SALES-TAX DATA 



tCX2 

jr tsjo 

— o 

o o 

a c 
o ^ 



o o 



0) C 






;ph 3 



' e3 



(15 fl 

" 9 



(U -tJ 

a^ Si 



<i> 



bC 



o3 
O 



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b3 

.S 03 

XI 3 

o xi 

(S c 

:5 (S 
o 2 






03 O O <D ^ 

03 rr -^^ «] C 

73 CJ O 3 cj 

P-l 



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O blJ ^ 







G O 

■=5 






S S « 3 



&. 03 



g m ^ 









o +^ 



o cS 



g a.3 bo 



.rt Oj -1-2 03 



+^ 03 O 3 03 03 



^ o o5 

g 03 ^ 

is s-i !3 

03 o c3 



22 03 o3 o s3 



.5 r:! tc 



O -t^ ^ 
+3 ^-1 03 

Js ? 3 

o3 O tS 

^^ ^ 

^ L. ■" 

O S t-i 

O o 



■5? -5 
■=- 12 

03 i= +3 

Cj 03 

o3 P^ O 
03 t*-! 

&.3t3 
-ff ^ 03 
C^ 03 

O 3 

O cS-J 
^ bC+? 

".S 03 

S 3 !^ 
'-' ■ 03 



S« 



o 




SALES-TAX DATA 



99 



3 02 



§"03 
CO f^ 









o 

o 

ffl 





Coo 




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03'-^ d 










ised 
ing 
cut 


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on or 
not b 


hollo 
n an 
kind 






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O 1 


fe b i^ 


^ o 


t-i 1 


lassw 
prep; 
or di 


name 
othei 
ware 


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c 


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OJ 


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a 


y 



a 2 o 



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'-^ 03 O 

"S ^ O X 



s sa 



^ oj 



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73 C 



r^ 03 






ri (13 +i 

o a C 



^3 
o3 






S 03 



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2 ^ 



■^ PI 

!- O 
T3 






o 



to 



^ to 



i-< o f-i 
■-^ "2 (B > 
<-■-. rj ^ 03 



.22 ^tJ 



(D 



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03 03 



SS bi) 



a 



03 . ri CD r" 



w; H Ol p; 02 
P'^ O O O <v> 

g 31 o3 o^n 

G rH ;3 '^ o3 

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S ^ 03-^ O 3 
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rs^o^CL, .;=;^o5Jj 



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cu o 



r^ o 



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t, jH (_ c .2 

o3-i=l O o3 ^4 

t; J?^ 3 



to CDi=-t o 2 
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O 



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to -t:^ -fi 



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a- S 3 y 



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o3 
3 -3! 






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f^ o 



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a 3 -(J c. o h n^ 

O 03 g to 0x3 03 3 
Q (1^ H ffiO 



<= 2 
^ o 



3 CO 



se 



s a ^ 

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a^ a 

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t;y3 ^^ 

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>.0 a 



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2 ^ O 






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ft 


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(11 




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£ 03 g £ 

b 03 g O 



•2» "^ ^ 

J.5 CO 

0-a ^ 
g CO a 

I 03 . " 

-^"^ 3 

C c3 O 



100 



SALES-TAX DATA 






^■?. 



5a 



O 3 . 
o3 ^ OT 



<y 



X o. 



r5fa-,^ 



S^ ^ 2^ 

t- ca ^ 

11° 



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O 



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2 O 

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fp o 03 ^A 03 



0) 


^*l 


T! 


(h 


13 


fl 








0) 


^ 


-1-^ 


p 


<y 






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+-> 


.y. 


-C 


«4-H 




CJ 




r/l 


Ol 




Tl 




ro 


t- 


1-i. 


-t 


O 


CO 


Si 


fl, 


u 


-t-j 


(D 


C! 




C 


o 




o 


■4:; 


Tl 


c^ 





a; 


Ci 


73 


-r-> 


o3t3 


y- 


r-| 


n 


03 






1-) 




U,rt 



o 



£0 



C3^ 



2 '^ 



ft 



ft 



Ph 



rr' 




tr. 


03 




Tl 


0) 






P! 




03 












7> 





G 




r! 


JJl 


03 








3 





ft 


tt! 


m 


xi 


0^ 


n 




-+i 





S S -S ^- a 
"S-SftS 



'-I ES 


C iS 3 

ft-S 


^^ 


03 


e menti 
graphic 
third c 




a 0^ 


CO -|J 


m'O w 






(- io ft 
C3 r\ 












ic e 

or s 
oth 


CO CD 

fc c qu 

ft <U Sq 


iiotograph 
rejectors f 
enses and 


largers or 
nexposed 
except as 


flHpHH-5 


P 



c o 

03 i-^ 

to 2 

--^^ S 

03 o3 ,r; 

7:: ft o 

ftcs -5 



So 

3 !0 



C CO QJ ^ 

S.S S O 

S s " 

S *-" r' ?-' , 



?S CO 



ft3 



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CO j2 

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CO '^ 

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03 qS 



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C 5 
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CO +i 

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bC'03 5J 

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.;; Oj <B 0; 



O CO 

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«5 § 8 « 

O C "3 "t^ 



a 



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f= «: 

o 

O 



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03 



T3 £ 

C G 



'.2 S OS 



O 



' >. ft 
'oft' 
H<1 



SALES-TAX DATA 



101 



5^ c S 
'ill 

O S 53 . 
tH o ^ 



<-* *-* ^ ^ 
o -^^ 

O tH OJ ^ 

o3 CO 
50 ^ Sh o 

bo o CDT^ 
, 00 -■-< 

w 03.5^ 



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t-i 


C 




a 


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^ 


:3 





^ 





;_( 


X! 


<ij 




J=i 




-u 


c 


0) 


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& 






aB 



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b^ 



oj^t2 

CO S'S 
bC52 S 






.-s a 



03 M 0^ 

_ CD C 
>^.2 ° 



O O 






^ >. S .-S 



bD > f::; M ^s ^ 
•r-. O 3 o3 t3 

5 >,o cu o 



CO ^ 



-a 0) ^ .SJ o ^ ^1 

^COCOi^S-j'-^TjoS 

111! fill. 

« O M 



^ ^^ 
cr (L> 

2^1 a 

bC C 






<D 



S.S 2 23o 



-^ e.. 



a a. 



c3 



t-: 03 



c3 o3 i;^ O av<B 2 $S 

• a QJ S bc ^ S 2 



03 

c» i; O) t: t^ uj 

- 03 H.^ Q.^ 

.-H to CJ t-< t^ 

c3 ftJR 



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to . i-i 

■ C3 



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dj ;-« 









•^ o fa 



o3 



1oS:scg 
S ^' = ^ i » 






73 
o3 






o3 



O 



w 

V 

• ■ s 

bD O 

•Sb. 

^ s 

o o 

:gco" 
fc< ■ 

:s m 03 '^ 

03 S i^ 3 c« 

^H 03 jj ^ i;< 

1=^ " '^ s-Q 



bD 

a 



G 

o 

,G 

a. 

'O G 



;- C3-5 
o j:5 CO Qi 

*-(jj 03 d; O 



CO +3 

H CU 

-1-3 aj 

^ 2 



ri: c3 



G o 



^S G 
G-43 



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•^ bC 



G 
bOG 

bbg 
^a 
O^ 

ft „ 



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":a 

i2m 



fto3^ 
o > 0) 



102 



SALES-TAX DATA 



■o 




c 




8 


^ 


u 


m 


a 




















a> 


tc 


X3 






g 


lui 


o 


03 
XI 


■o 


^ 


a 


C 













3 
J2 


H 







H 


T3 


3 


O 

o 
O 


o 
o 



•■^ >? 05 "^ 









iJ oj 



1« 


g 
'3d 
c 

01 


peram 
of a 
s than 


^5 


a 
o 

a 


>^^ 


a; 


T3 «- 


-t3 U_| 


a 


^ r! 


(- 


o o 


:^ 




y-i 


G t, -|J 


a 


1— < 


o 




03 "rs O 






^-g 


r/T 


-^ a 


CO o 




<V 


"3 O «♦-( 


i. o 


CJ 


^■^ 


r, 




-^ -G 


T3 

o 


o3 CO 


J3 


arria 
uma 
ddth 


s 



H < P^ 





tC 




^ 02 


o 






QJ 




a> t3 


a 




Q, <u 


CO 




St 


o3 




T; 






^.03 


a 






CD 










1^ 

o3 -u 


0) 


Pi 

g 


rC O 


t-( 


izi 


O 3 


o 




OJ ^^ 


be 


'o 


Ss 


OJ 


o 


c 


M 


'b 


tn O 


CO 


f^ 


0) O 


03 




^ ?^ 


a 


OJ OJ 


'♦-( 


o 


^o 


o 


p^ ?;' 


OJ 


+3 


^—^ o 


bD 


^ 


co'O 


S 


•S 


o C 


iH 


t3 



" ti^ fl 5 

H ^ +^ .-H c^ 
03 O t. g 02 



Si fH aj 



rt 



SALES-TAX DATA 103 

(e) determination of wholesale peice 

The wholesale value of the goods is taken to be the price which in 
the opinion of the commissioners of customs and excise the goods 
would fetch, if sold at wholesale in the open market to a retailer carry- 
ing on business. If any dispute arises as to the wholesale value of 
any particular goods, the matter is to be referred to the arbitration 
of a referee appointed by the Lord Chancellor, who cannot be a Gov- 
ernment official. The decision of the referee will be final and conclu- 
sive. 

In computmg the price which the goods would fetch m the open 
market, the following assumptions must be made: 

(a) That any commission or other costs, charges, or expenses inci- 
dental to the making of the contract of sale are to be paid by the 
seller ; 

(b) that the price is to include the cost of delivery to the buyer 
at his place of business, and of insurance and other costs, charges 
and expenses incidental to such delivery; 

(c) that the price is the sole consideration for the sale; 

(d) that neither the seller nor any person associated in business 
with him has any interest, dhect or mdirect, in the subsequent resale 
or disposal of the goods; and 

(e) that there has not been and will not be any commercial relation- 
ship between the seller and the buyer, whether created by contract 
or otherwise, other than that created by the sale. 

(F) COMPUTATION OF TAX 

The total tax is required to be computed at the correct rates on 
all sales of chargeable goods delivered during the period covered by 
the return. A deduction can be claimed for the tax on goods delivered 
but unpaid during this period. But such tax must be paid on the 
next return, even if the registered person has not received payment 
for the goods. It is possible that some abatement of the tax will be 
granted for debts which are proved to be bad and which are allowed 
as a deduction from profits for income-tax purposes. 

(g) registeation 

Every wholesale merchant and every manufacturer whose business 
includes the selling of chargeable goods under the Act must register. 

Registration is not required if the gross proceeds from the sale 
of chargeable goods have not, on the average, exceeded £2,000 or 
$8,000 per annum. In the case of a newly established business, 
registration is not requh'ed if the gross sales are not likely to exceed 
this amount each year. In the case of an existing business, the 
latest day for registration was September 20, 1940. ^¥here a new 
business is commenced or where a change is made in the character 
of the business so that registration is necessary, this must be effected 
within 14 days from the commencement or change in the business. 

A wholesale merchant or manufacturer who has not registered owing 
to the fact that his sales or chargeable goods have not exceeded 
£2,000 per annum, must register with the Commissioners as soon as 
he becomes aware of any change in his business which would result 



104 SALES-TAX DATA 

in his gross sales exceeding the average of £2,000 or $8,000 per annum. 
For faihiro to register, a penalty of £100 or $400 is imposed which is 
increased by a further £10 or $40 for every day during which the 
default continues, 

A certificate of registration will be issued to all registered persons, 
which will be canceled if it becomes no longer necessary for them 
to be registered under the Act. 

If the commissioners of customs and excise decide the registration 
should be made in any particular case, at least 14 da5's' notice of 
intention to register must be given to the person concerned. 

The fact that a person purchases goods in large quantities at whole- 
sale prices docs not of itself necessitate registration by him. Thus a 
1 otel or institution may purchase commodities in bulk but such a 
buyer is not a wholesale merchant. 

The advantage of registration to the wholesale merchant or manu- 
facturer is that he is able to purchase his goods free of tax, and he does 
not have to pay the tax until the goods arc sold. The retailer, on the 
other hand, must pay the tax when he acquires his goods from the 
w^holesaler and is, therefore, compelled to finance the tax during tlie 
whole of the period that the goods remain his his stock-in-trade. 

If a wholesale merchant purchases chargeable goods other than his 
stock for his business, he is chargeable with the tax at the time of the 
purchase of the goods. This is also true with respect to a manufac- 
turer wiio acquires goods other than for use as materials in his busin'?ss. 

All chargeable goods received or purchased tax-free from other 
registered firms or fi-om abroad must be recorded as such and the 
seller's name and address or the importation particulars must be 
traceable if required. The disposal of all chargeable goods in the 
firms' business must be traceable, therefore, whether used ija the 
manufacture, vrhcther sold to other firms, whether transferred to 
separate retail branches, or whether used other than as materials or 

stock. -1 

Where goods are sold as stock or as material to other rt-gistered 
firms, the^Nvritten order for the goods on which the buyer's registered 
number is shown must be retained for production as a voucher. In 
the case of tax-free sales to governments the contract or order must 
be kept available for inspection. Records of all transactions in charge- 
able goods must be kept in such form as will enable the taxpayer to 
file a full and correct periodical return. 



CANADIAN MANUFACTURERS' SALES TAX 

The Dominion of Canada adopted as a part of its consumption 
taxes in 1920 a general sales lax. It is levied m addition to its 
customs import duties and its selected excise taxes. In its earlier 
form it was a tax on turnover of goods and was levied at 1 percent. 
In 1924 it was establisiied substantially in its present form. Since 
1921 it lias constituted one of the chief sources of revenue. From 
1921 the percentage of total revenue raised by the sales tax has 
ranged from 10 percent to as high as 29 percent in 1924. For the 
fiscal year 1940-41 it represented 20.74 percent ot the total revenue; 
and according to the estimate for 1941-42, the percentage is expected 
to be about the same. In this connection it may be observed that 
the consumption taxes, consisting of customs import duties, excises, 
and sales taxes, represent from 30 to 35 percent of the total revenue 
collections as compared with income tax which produced m 1940-41 
31.23 percent of total revenue. The table below shows the revenue 
collected from these sources in 1938-41, mciusive. 



1939 to 1940 


1940 to 1941 


1941 to 1942 1 


Sales tax . .-. _. . . -. .. .. 


$144,851,000 


$194,153,000 

129,000,000 

86,001,000 

87.423.000 


$190,000,000 


Customs 

Excises 


104,301.000 

. 1 61. 032 000 


137, 000, 000 
51,000.000 


Income on persons 


! 71.874,000 


135,000,000 



Totaltases 887,873.000 ; 778,290.000 '■ 1,069.000,000 



' Budget estimate, April 1941. 

T?ie tax in its earlier forms. — In its earlier forms the tax was applied 
at the various stages of production and in this form was in the nature 
of a turn-over tax. It was pyramided from the earher stages of manu- 
facture to fhial transfer of the finished article all the way from the 
producer to the consumer. For example, in the price of a pair of 
shoes the tax may have been added several times, the tax having fallen 
on each sale of the hide used by vendors whose sales were taxable. 

Moreover, such pyramiding varied according to the number of tax- 
able sales m the production and distribution of different goods. Thus 
the goods that went through manv processes had a competitive 
advantage over goods processed only once, resulting in stimulation 
of business combination. The tax could be avoided by businesses 
which processed their own raw materials or bv manufacturing an 
article all in the same factory and not turnin^: the unfinished article 
over to another processor. Sometmies articles were rented instead 
of being sold. Machineiw could be obtained and used free of the 
tax by the latter method of avoidance. 

However, in its present form, which has existed since 1924, the tax 
falls but once, when goods pass from the licensee to the unlicensed 
transferee. 



' Sources: Canadian Sales Tax ^crvi^e, Cr.-I 1942: DonUe Taialion.ioint CommitieeonTa.\ation, 1933 

105 



106 SALES-TAX DATA 

SCOPE OF THE TAX 

Present jorm. — In its present form the tax may be considered as 
applicable lo certain goods at the full rate (at present 8 percent), to 
another restricted class at one-half the sales tax rate, and as not 
applicable to another class of goods, or goods exempt, which are 
generally regarded as the prime necessities. 

To this extent, therefore, it resembles a principle of the British 
purchase tax which treats goods as (1) subject to a full rate, (2) 
subject to a reduced rate, and (3) as nontaxable or exempt. 

The tax underwent frequent changes from 1920 to 1924 when it was 
established in substantiaUy its present form, revised to prevent all 
pyramiding. It consists of a consumption or sales tax on the sale 
price of all goods produced or manufactured in Canada, goods imported 
into Canada, goods sold by licensed wholesalers, goods sold by any 
person other than a taxable manufacturer, producer, etc., where such 
person has acquired from the taxable persons already mentioned, 
through a nontaxable transaction, the right to sell the goods. The 
current rate is 8 percent. 

Since 1924 this tax has been levied once only on the "sale price of 
all goods produced or manufactured" in Canada. Pyramiding of the 
tax" by imposition at separate stages of manufacture is prevented 
by a system of licensing. The tax falls when goods are transferred 
from a licensed manufacturer, wholesaler, or producer to an unlicensed 
purchaser. Transfer of goods from a licensed manufacturer or whole- 
saler to another so licensed is not taxed. Sales or transfers of materials 
for the manufacture of an article are thus free of taxation until they 
have taken form in the completed article and it is transferred from the 
licensed wholesaler or manufacturer to the unlicensed purchaser. 
Likewise, to avoid duplication or pyramiding the tax is not levied on 
goods partly manufactured and sold or on goods imported by a 
licensed manufacturer or wholesaler. 

As will be seen from the above, goods imported into Canada are sub- 
ject to the tax, which is payable by the importer or transferee when 
the goods are taken out of bond for consumption. 

Exemptions. — From the inception of the tax the list of exemptions 
has been a very long one. There has been a general tendency to 
extend the list, although there has been some restriction in times of 
depression and emergency. 

The exemptions in general include necessities such as food and fuel. 
Foods exempt are as follows: Bread; butter; cheese; cream; eggs; 
honey; ice; lard; salt; sugar; apples, dried, desiccated or evaporated; 
bakers' cake and pies not to include biscuits, cookies or other similar 
articles; fish and products thereof, not to include canned fish; flour, 
not including self-raising flour; maple sirup; meats and poultry, fresh; 
milk, including buttermilk; condensed milk, evaporated milk and 
powdered milk; vegetables and fruits in theh natural state. Also 
included in exemptions were newspapers, fuel, electricity, fertilizers, 
raw materials of farmers, farm machinery and equipment, and exports 
direct to foreign purchasers. Exports made indirectly to foreign 
purchasers are free of tax through draw-backs. 

In effect sales to Provinces are exempted. This is effected by grant- 
ing a refund of the tax paid on goods sold to a Province unless the 



SALES-TAX DATA 107 

goods were purchased by the Province for a purpose, which makes it 
subject to the tax. In general the tax apphes to goods imported by 
the Dominion, Provinces, provincial railways, or provincial commission, 
board, public utility, or university. 

Certain goods are subject to only 50 percent of the sales tax (4 
percent at the current rate) . This includes all goods manufactured 
or produced by the labor of the blind or the deaf and dumb in in- 
stitutions in Canada established for their care. 

ADMINISTRATION 

The administration of the tax is under the department of customs 
and excise. The law and regulations define taxable sales. Books 
and records of taxpayers are to be open to inspection by the Gov- 
ernment. 

Licenses. — Every manufacturer or producer is required to take out 
an annual license for the purpose of sales and excise taxes imposed 
by part XIII of the act. The license fee costs $2. A wholesaler or 
jobber applying for a license must give bond in amounts up to $25,000, 
which requires that adequate books be kept and true returns be 
rendered. Such licenses may be cancelled for cause. 

While manufacturers must be licensed and must pay a fee of $2 
therefor, the Minister of Finance has the authority to direct that 
small manufacturers or producers, selling at retail, shall be exempt 
from licensing. Such small manufacturers as merchant dealers, 
druggists, shoemakers, plumbers, etc., whose sales amount to less 
than $5,000 a year and job printers with annual sales of less than 
$3,000 a year are exempt. Wholesalers and jobbers may be granted 
a license to sell to other licensees without payment of tax. On the 
sale of goods by a licensed manufacturer or wholesaler to an unlicensed 
wholesaler or jobber the purchaser must be furnished an invoice of 
the goods, stating the amount of the tax; likewise, when an unlicensed 
wholesaler or jobber sells to a licensed manufacturer, wholesaler, 
etc. When a licensed wholesaler or manufacturer seles to a retailer 
or to a consumer, it is not required that the tax be shown. 

Beturns. — Persons liable for the sales tax are required to file a return 
each month of their taxable sales for the preceding month. The return 
must be filed even though there were no taxable sales; Such returns 
must be made under the regulations issued by the Minister of Finance. 

Payment of the tax. — The sales and excise taxes are payable at the 
time of filing the return, which is due not later than the last day of 
the month following the month in which the sales were made. Where 
goods are sold under an installment contract under which payments 
are made as the manufacture or production of goods progresses or by 
conditional sales the sales tax on goods produced or manufactured 
in Canada is payable pro tanto as each installment falls due. Where 
there is no physical delivery, the tax is payable when the propcrt}'^ in 
the goods passes to the purchaser. 



70095—42- 



SALES TAX OF AUSTRALIA ' 

GENERAL STATEMENT 

Australia imposed a sales tax in 1930 (Sales Tax Assessment Act 
No. 1, 1930). The tax was laid on the sale value of goods manufac- 
tured in Australia. The tax also applies to importations. 

Present form. — The law requires the registration of all manufac- 
turers and wholesalers and the tax is levied on the sales value of goods 
manufactured m or imported into Australia when such goods are sold 
to unregistered persons. It would appear that no tax attaches to the 
sale by a registered manufacturer to a registered wholesaler and that 
t u> act is intended to be effective on the wholesale price whenever 
p 3s?ible. 

The sale value of goods, where the goods are sold at wholesale, is 
the sile price; where the goods are sold at retail, if the goods are of 
a class which the manufacturer himself sells at wholesale, the sale 
value is the amount for which the goods would be sold by the manu- 
facturer if sold at wholesale; and in any other case the sale value is 
th > amount for which the goods could have been purchased by the 
taxpa^^er from another manufacturer if such other manufacturer had 
manufactured the goods in the ordinary course of bis business for sale 
to the taxpayer. 

Exemptions. — Exemptions from the sales tax mclude, in general, food- 
stuffs, beverages, and tobacco; agricultural maclunery, implements, 
equipment, and material; drugs, medicines, and surgical goods; fuel, 
power, and light; books, pnnted matter, and paper; scientific, edu- 
cational, and religious goods, and works of art; goods for use by gov- 
ernments, representatives of governments, and public bodies; certain 
manufactures of small businesses where the average annual value of 
goods sold is not in excess of £1,000 ($4,000) and some other small- 
business manufactures; and certain miscellaneous articles such as air- 
planes, airplane accessories, parachutes, coffins and caskets, gold 
bullion, and other materials. The goods exempt are specifically set 
out in the law and regulations. In addition, for tlie purpose of aid- 
ing certain manufactures there are other specific exemptions which 
otherwise would be taxable. Current rates are applied under three 
classifications. The rate is 5 percent on surgical goods, 20 percent on 
goods more or less in the nature of luxuries, and 10 percent on other 
goods neither prime necessities nor luxuries. 

ADMINISTRATION 

Registration. — Every person who becomes a manufacturer or a 
wholesale merchant after the commencement of the act is required 
within 28 days to become registered. A certificate of registration is 
issued which remains in force until the death or bankruptcy or the 
cancellation of the certificate of the registered person. The issuance 

' The Sales Tax Law and Supplement, by R. Ewing, Commissioner of Taxation; Double \Tazation, by 
Joint Committee onTaxati on, 1933. 

108 



SALES-TAX DATA IQQ 

of these certificates is conditioned upon the keeping of proper books 
or accounts, rendering true statements of all sales and duly payino- 
all tax required under the law. Heavy penalties are imposed for 
violation of these and other conditions required by law and regula- 
tions. 

As security for compliance with the conditions of any certificate 
of registration there may be required a deposit of cash or Treasury 
bonds in such amount as the Commissioner of Revenue may consider 
reasonable. 

Reiurjis. — Every person who makes sales subject to the tax or treats 
any goods as stock for sale by him at retail or applies to his own use 
any goods subject to the tax must make a return within 21 days after 
ths close of the month, setting forth such information as shall be 
required by the regulations. The Government may require further 
return, showing such additional information as the Government may 
require, or attendance and giving of evidence with respect to sales. 

Collection. — Payment of the tax must accompany the return which 
is to be made within 21 days after the close of the month in which the 
sales were made. In case the Commissioner shall find that further 
tax is payable by any person, he may assess the sale value upon which 
the tax should have been paid, and the tax must be paid within the 
date set in the notice in writing demanding paj^ment. Where the 
Commissioner finds that tax has been overpaid and is satisfied that 
the tax has not been passed on by the taxpayer to some other person, 
he may make refund of such overpayment. 

Revenue. — Figures are not available of the current revenue collec- 
tions, but past collections would indicate that for some years past the 
sales tax has represented from 12 to 16 percent of the total tax revenue. 

Incidence of the tax. — It would appear that the tax is passed on to 
the consumer and that pyramiding of the tax by imposition on suc- 
cessive transfers is prevented, since the tax apparently falls only when 
goods pass from a registered to an unregistered person subject to the 
tax. This is in effect the cardinal principle of the Canadian sales tax 
where it has been generally regarded that pyramiding has been efi^ec- 
tually avoided. 



THE PHILIPPINE SALES TAX 

A sales tax was imposed in the Philippine Islands in 1904. At 
this tnne tlie United States instituted numerous changes in the tax 
hnvs/ The law imposed a tax on the gross sales by merchants and 
included manufacturers, merchants, and common carriers. It has 
undergone frequent revision but has been retained and is one of the 
principal sources of revenue. It is retained in the 1942 budget and 
under its existing form it includes merchants, producers, manu- 
facturers, occupations, trades, professions, and farmers. The latter, 
however, accorded a preferential rate. 

In 1930 its was the source of 16 percent of the total tax revenue; and 
according to the latest figures available, it represents approximately 
21 percent of the revenue. 

This tax received much attention in 1921 when general sales taxes 
were being proposed in the United States. In that year one of the 
witnesses before the Committee on Finance of the United States 
Senate, who was a former collector of internal revenue in the 
Philippines, states of the tax that it was regarded not only as produc- 
tive but as easy to administer and equitable. There was, however, 
considerable opposition from certain quarters in the Philippines 
to the tax as then in efl'ect, nearly all of which, however, recom- 
mended the substitution of a sales tax in some form. This opposition 
was reported by a representative of the United States Department 
of Commerce in Commerce Monthly, March 1921, 

The opposition apparently was principally as to its character and 
operation, since the tax has been retained in the fiscal systeni of the 
Philippine Islands and at present contributes approximately 21 per- 
cent of all tax revenue. 

1 General Sales Taxation, A. D. Buehler, 1932. 
110 



THE FRENCH SALES (TURN-OVER) TAX^ 

("Impot sur le chiffre d'aflaires") 
INTRODUCTION OF TAX IN FRANCE 

The present French turn-over tax was introduced in that country in 
1920. At that time the financial condition of France was in an 
alarming state, with revenues far below ordinary budget requirements, 
and with a program of rehabilitation about to be launchecl. A turn- 
over tax upon the gioss receipts of all business transactions was 
adopted as the quickest and easiest way in which to raise the large 
amount of revenue needed, although even its most earnest advocates 
admitted its defects and inequities. 

The direct forerunner of the turn-over tax was what was known as 
the payments-tax system, inaugurated during the war period, under 
which taxes were levied upon receipts for certain commercial and non- 
commercial payments, for luxury articles, and for expenditures in de 
luxe restaurants and hotels. Even these taxes were not strictly an 
innovation, since France had imposed a graduated stamp tax on aU 
acknowledgments for payments ever since 1871. 

LEGISLATIVE DEVELOPMENT 

As originally enacted on June 25, 1920, the French turn-over tax 
imposed a rate of 1.1 percent on the turn-over, or gross receipts, 
originating in France, of two chief classes of persons: (a) Those who 
either customarily or occasionally buy to resell; and (6) those who 
perform acts connected with activities which are taxable under the 
commercial and industrial-profits schedule of the income tax. The 
first class included merchants and manufacturers, while the second 
covered certain commercial middlemen, such as brokers, commission 
men, etc. There was also a third class, of minor importance, com- 
posed of those liable to a proportional tax on mine profits under the 
law of 1810, who do not pay the regular profits tax. 

There were two types of exemptions, express and implied. The 
implied exemptions included farmers, professional men, and salaried 
workers or wage earners who did not come within the definition of 
those "buying and reselling" and whose profits were not taxable 
under the commercial and industrial profits schedule of the income 
tax. The express exemptions included exports, goods, and services 
with fixed Government prices, and transactions already subject to 
special taxes. 

Payment of the tax was to be made each month, the taxpayer 
drawing up a statement of his turn-over for the preceding month, cal- 
culating the tax due, and sending the statement and the money to 
the administration. In practice, certain businessmen were permitted 
to send in annual statements, under a so-called forfait system. In 
1922 the forfait was extended to a larger group of taxpayers, but 

' Source: Preliminary Report on Federal and State Taxation, StaS of the Joint Committee on Internal 
Revenue Taxation, 1933. 

Ill 



112 



SALES-TAX DATA 



a truo forfait system was not introduced until 1924. Under this 
system an estimated tax base is used, payments arc made quarterly, 
and there is absolute freedom from all inspection of books by tax 
agents. 

The chief developments of the French turn-over tax since its original 
enactment in 1920, in addition to the inaucjuration of the forfait sys- 
tem, have been the increase in rates in 1924 and 1926 and the enact- 
ment of "replacement" taxes in 1925. The commodities subject to 
the replacement tax were withdrawn from the scope of the turn-over 
tax; and instead of the low rate of that tax being imposed every time 
these commodities changed hands, a single tax, at a higher rate, was 
levied at some early stage in their economic development. In 1926, 
when the Parliament raised the general rate from 1.3 to 2 percent, it 
made the increase applicable only to sales other than those made at 
retail or for consumption on the spot. However, the confusion cnsren- 
dered by the necessity of distinguishing retail sales from all others 
caused Parliament, four months later, to include retail sales within 
the scope of the higher rate. 

Before discussing the operation of the present French turn-over tax 
mention should be made of the luxury and import taxes which have 
been an integral part of the turn-over-tax system. The luxury taxes 
are divided into two groups: (a) Those imposed on luxury articles 
sold at retail and (b) those imposed on the gross receipts of luxury 
hotels, restaurants, etc. The import tax is applicable to all goods 
enterine: France whether or not as a result of a sale, and is imposed 
in addition to any customs duties. 

This studv of the French turn-over tax covers the law up to about 
May 1, 1932. It is hoped that it is substantially accurate, although 
some difRculty was encountered in following the many changes that 
have taken place since its codification in 1926. It has been necessary 
to translate the law from the French. 

In the following table there are shown the rates applicable to sales, 
gross receipts, and luxuries under the acts of 1920, 1924, 1926, and 
1930: 

Rates of French sales and luxury taxes 



I. Sales tax: 

All sales in general (turn-over) ' 

On gross receipts of those whose acts are concemed with activi- 
ties taxable under the business profits tax of 1917 

On gross receipts of those subject to the mine tax 

II. Luxury taxes: 

On retail sales of articles classed as luxuries 

Payments for food, lodging, and drink consumed on premises of 
luxury establishments — 

Of second class 

Of first class. 



Act of 
1920 


Act of 
1924 


Act of 
1926 


Percent 
1.1 


Percent 
1.3 


Percent 

22 


1.1 
1.1 


1.3 
1.3 


2 
2 


10 


12 


12 


3 


3.6 


4 


10 


12 


13 



Percent 
2 



86 

*3 



«3 

«4 

«6 

«13 



1 The "decime," or 0.1 percent tax oa all sales, which goes to the communes or local authorities, is included 
in the rates of sales in general. 

» In April 192G, the rates were: Retail rates, 1.3 percent; wholesale rate, 2 percent; intermediaries, 2.5 
percent: newspapers and periodicals, 1.3 percent. In August 1926, the rate was made 2percent for all except 
newspapers an 1 periodicals, which remained at 1.3 percent. 

3 On articles classed as luxuries by their inherent nature. 

* On articles classed as luxuries because selling above a certain fixed price. 

« For establishments absorbing tax in their sales price. 
<For establishments adding tax as a separate item in sales price. 



SALES-TAX DATA 



113 



OPERATION OF THE PRESENT SALES TAX 

Generally speaking, the application of the French sales tax has been 
practically unchanged since its original enactment in 1920. The 
present rate of 2 percent applies to the following classes of taxpayers, 
and is imposed upon the base shown opposite each classification: 



Taxpayers 



Tax base 



I. Those who buy and resell in France. (Merchants, manu- 
facturers, real-estate dealers, building contractors, corpora- 
tion sales to subsidiaries, and consumers' cooperatives.) 
n. Those whose acts are concerned with activities taxable under 
the business profits tax of 1917: 
(a) Travel agencies, theater ticket agencies, labor agen- 
cies, or any agency that by contracting inde- 
pendently for the services at one agreed price with 
the rendor and then by reselling at whatever 
profit can be made removes the customer from 
contracting with the person or agency actually 
rendering the service. 
(6) Agents, brokers, or other intermediaries between 
customer and actual seller or rendor of services. 

III. Those subject to the mine tax. (Extraction of material from 
the earth not equivalent to purchase, so not covered by the 
"buy and sell" clause.) 



The gross receipts or turn-over of sales 
of tangible goods actually made. 



(a) The total gross receipts from the 
sale of such services bought to 
resell. 



(6) The total gross receipts of commis- 
sions, fees, etc., received f -om the 
sale of services as an intermediary. 

Total gross receipts from the sale of 
tangible goods. 



The phrase "buy and resell" was for a time construed to include 
only gross receipts of those dealers buying with an intent to resell at 
a profit. This interpretation excluded consumers' cooperatives, but 
court decisions rendered in 1923 and 1924 nullified this interpretation 
and held the tax applicable to any sale, regardless of the vendor's 
intent when tha purchase was made. However, this does not include 
the casual disposition of an article of no further use to the o^^^ler 
because obsolete, unneeded, or replaced by another article. Up to 
1925, sales of real estate bought with an intent to resell were not taxed 
on the gromid that they were "civil," not "commercial," transections, 
but this interpretation of the taxing authorities was nuUified by court 
decisions and later by statute. 

The titrn-over tax may be said to be imposed on money payments 
made in exchange for commodities delivered and services rendered, 
but it is limited to such payments made in the ordinary course of 
business between merchants and manufacturers and their customers. 
No tax is imposed on payments received by certain economic classes, 
such as farmers, laborers, and professional men, and on business pay- 
ments received from the sale of certain classes of commodities and 
services. These exemptions of persons and things have sprung from 
different motives. That in favor of persons is usually implied from 
the wording of the law, and originated not only from a desire to avoid 
political unpopularity but from a fear that the burden of the tax 
could not be shifted to the ultimate consumer as intended, and to 
avoid administrative difficulties. The exemptions in favor of certain 
commodities and services are noted specifically in the law, and have 
been adopted because of other taxes on these sales and in order to 
lessen the burden on the poorer classes of consumers. These exemp- 
tions are summarized below under three divisions: (A) Those specif- 
ically embodied in the basic law of 1920, (B) those specifically provided 
for subsequent to the enactm.ent of the basic law, and (C) those implied 
from the wording of the law: 



114 SALES-TAX DATA 

(A) Specific exemptions under basic law of June 25, 1920: 

1. Sales transactions already subject to tax under previous laws. 
These include: 

(a) Sales on the stock and commodity exchange made by those who 
habitually carry on this activity. 

(b) Pharmaceutical preparations subject to a tax levied on the man- 
ufacturer and/or importer. (Wholesalers and retailers are therefore 
not exempt from the turn-over tax.) 

(c) Savings societies and insurance companies. 

(d) Amusements subject to an admission tax. 

(e) Vehicular passenger and freight traffic (taxicabs and dray age). 

2. The turn-over of any business subject to govermnental control 
as to sales price. This includes: 

(a) Sales of bread b}^ bakers. (Pastries, however, are not exempt.) 
(6) Sales of retailers of State monopolies, viz., tobacco, matches, 
stamped pxiper, telephone and telegraph service. 

(c) Revenue from rates of public utilities subject to governmental 
control of rates (power companies, railroads). 

(d) Commissions and fees of stockbrokers, shipbrokers, marine- 
insurance brokers, land banks, and real-estate-loan societies when 
their rates are fixed by the Government. 

3. Exports except antiques and certain works of art. (However, 
only the last sale made in France to a foreigner, deliver}'' to be made 
abroad, is exempt.) 

(B) Specific exemptions by law made subsequent to basic law: 

1. Newspapers and periodicals with a sale price not in excess of 
25 centimes. (Increased to 50 centimes in 1926.) 

2. In 1923, artisans whose gross receipts came from the sale of 
finished products, made by their own labor from raw materials, were 
declared exempt if they qualified under regulations defining the extent 
of business one might carry on and still be a "small artisan." 

3. In 1924, wheat and rye if used in the making of bread. 

4. In 1925, sales of articles made subject to a replacement tax. 

5. By act of April 4, 1926, sales of milk for consumption in its 
natural state. 

6. Commission merchants, as well as true buyers and sellers of 
cereals and grains, if not already exempt as dealers in bread, were 
placed on a turn-over rate of 0.55 per cent on total value of srrain 
handled by them by the act of March 26, 1927. (By act of April 16, 
1930, dealers in potatoes, and by act of April 26, 1930, dealers in 
milk, eggs, fresh and dried fruits, fish, cream, butter, and similar 
articles were added to the list of products the sales of which by com- 
mission merchants or true dealers were to be taxed at 0.55 per cent.) 

7. In 1928, receipts from the sales of, and of advertisements in, 
philanthropic publications. Receipts from all schools if not coming 
from commercial operations. Receipts of nonprofit restaurants for 
students. 

8. In 1929, bv act of Julv 13, flour, semolina, and refuse grain. 

9. In each year articles that were made subject go the replacement 
taxes were exempt from the turn-over tax. 

(C) Exemptions implied from wording of the law: 

1. Sales of farmers' produce grown by themselves. 

2. Gross receipts of liberal professions, viz, doctors, lawyers, ac- 
countants, etc. 



SALES-TAX DATA 115 

3. Wages and salaries of laborers. 

4. Consumers' cooperatives were considered exempt until specifi- 
cally rulled not exempt by the administration in 1924. However, 
such cooperatives buying farm materials are held exempt. 

The French turn-over tax, being a tax on the gross sales of all busi- 
ness and not a single levy on a completed article or transaction, 
naturally results in a pyramiding, or piling up, of the tax. This 
pyramiding may be illustrated by the following example: 

Example I. 

A, a manufacturer, sells an article to B, a wholesaler, for $100. 
A pays a tax of 2 per cent on his gross receipts. B sells the article 
to C, a retailer, for $140. B pays a tax of 2 percent on his gross re- 
ceipts. C sells the article to an ultimate consumer for $200. C pays 
a tax of 2 percent on his gross receipts. 

The total taxes that would be collected on the above sales would 
amount to $8.80. This sum would be paid as follows: 

A — Gross receipts $100, tax $2. B — Gross receipts $140, tax $2.80. 
C— Gross receipts $200, tax $4. 

Included in the gross receipts of B is the sum of $100, representing 
the recovery of the original cost of the article to B. B is actually 
paying a tax of 2 per cent on his recovered capital. In the case of C, 
his sales price of $200 includes his recovered cost, or capital of $140, 
on which another tax of 2 per cent is being levied by the Government. 

Pyramiding is illustrated by breaking up the total taxes paid as 
follows: 

The amount of $100 at 2 percent, three times, $6; $40 at 2 per- 
cent, two times, $1.60; $60 at 2 percent, once, $1.20. 

Middlemen such as B and C have escaped the penalizing effect of 
the French sales tax by giving up their status of dealer and becoming 
commission merchants, paying a tax on the gross receipts of their 
commissions. In that situation, A would consign the article to B, 
B might put the article out on consignment to C, and C would sell 
the article for $200, retaining $60 as his commission and forwarding 
the balance to B. B would retain $40 of that amount and send the 
balance, $100 on to A. A would pay a tax of $2; B a tax of $0.80; 
and C a tax of $1.20; the Governm.ent receiving a total tax of $4. 
The replacement taxes, taken up later in this discussion, sought to 
correct this legitimate evasion of the tax. 

Pyramiding results in a somewhat larger tax being collected as a 
result of a situation that permits the dealers to pass the tax on to the 
ultimate consumer by adding the tax to the sales price of the article. 
This result is illustrated as follows: 

Example II. 

A's selling price $100 

Anticipated tax 2 

A's actual selling price to B . 102 

The tax is levied on A's actual selling price (gross receipts) and 
amounts to $2.04. A has recovered all but $0.04. 

Cost to B .. $102. 00 

Expense and profit margin 40. 00 

Anticipated tax 2. 84 

B's actual selling price to C 144. 84 



116 SALES-TAX DATA 

The tax on B's actual selling price (gross receipts) amounts to 
$2.89G. A has recovered all but $0,056. 

Cost to C .$144. 84 

Expense and profit margin 60. 00 

Anticipated tax 4. 096 

C's actual selling price 208. 936 

The tax on C's actual selling price to the ultimate consumer 
amounts to $4,178. C has recovered all but $0,082. 

The total taxes that would be collected on the above sales would 
amount to $9,114 distributed as a burden as follows: On A, $0.04; on 
B, $0,056; on C, $0,082; on the ultimate consumer $8,936. A, B, and 
C liave paid a tax on the taxes recovered by them in their sales price 
(gross receipts), but in most cases that is also passed on by the dealers 
by adding an estimated amount to cover the tax on the anticipated 
tax already included in the sales price. 

THE IMPORT TAX 

The import tax, which is levied in addition to the regular customs 
duties, is in distinct contrast to the turn-over tax proper, since it has 
no relation to sales. On the other hand, the importation of goods is 
the sole occasion for imposing the tax, and it is all-inclusive so far as 
tangible goods are concerned, except for a few items which have been 
exempted either by law or administrative ruling. The base upon 
which the import tax is levied includes not only the value of the 
article at the port of entry but the amount of the customs duty, if any, 
as well. Aside from raising revenue, the purpose of the tax is to 
protect French manufacturers and merchants from competition with 
tax-free foreign goods in the domestic market. Until just recently, 
the rate of the import tax corresponded with that of the turn-over tax, 
but under the law of March 31, 1932, there is a rate of 2 percent on 
raw products, 4 percent on products that are further advanced than 
their natural state, and 6 percent on finished products. Once im- 
ported, the goods are subject to the regular turn-over tax. There are 
certain exceptions, however, which should be mentioned. Merchant 
importers are granted exemption from the turn-over tax in connection 
WTth the first sale in France of certain raw materials on which the 
import tax has been paid. Under the decree of August 14, 1925, 
which still appears to be in effect, this exemption covers such raw 
materials as hides, wool, silk, cereals, rice, cacao, rubber, rough 
lumber, cotton, flax, hemp, jute, and natural phosphates. Imports of 
commodities which are subject to the replacement taxes (hereafter 
referred to) are exempt from the import tax just as domestic products 
subject to these taxes are exempt from the turn-over tax. A special 
import tax, in lieu of the regular tax, is imposed upon the following 
articles: 



SALES-TAX DATA 



117 



Commodity 


Special 
import 

tax 


Remarks 


Luxury articles for the personal use of 

the importer: 


Per- 
cent 

10 

7 

10 

7 
7 or 10 

16 


If imported by merchant for resale, regular import rate 




applies. Later sale taxed at luxury-tax rates. 
Do. 


Automobiles: 

Passensier, valued at more than 
7,500 francs. 

Mixed passenger and commercial 

Chassis, bodies, etc - 


Payable no matter to whom destined. 

Do. 

If destined to manufacturer, regular import rate applies. 




Later sale of completed car taxed at luxury-tax rates. 
If destined to manufacturer, tax payable when article 




leaves manufacturer's hands. 



THE REPLACEMENT (SINGLE) TAXES 

In 1925 there was orginated the first of a series of exemptions of 
certain commodities from the turn-over and import taxes and the 
substitution of "replacement" or "production" taxes on them. The 
replacement tax is a tax at a high rate levied upon a commodity only 
once, at some early stage of its production, and in lieu of all turn-over 
or import taxes. The rate is calculated to replace the amount of 
revenue which was derived from the low turn-over rate when imposed 
every time the commodity changed hands. This innovation con- 
stituted an attempt to free as many t£!xpa3^ers as possible from the 
continual visits of the tax collector, to lessen the burden on the admin- 
istration of checking a large number of taxpayers, and to do these 
things without any decrease in revenue. Another purpose was to 
check the evasion of the turn -over tax accomplished by certain true 
dealers in coal, grain, and other commodities who were changing their 
commercial status, actually or apparently, to that of commission 
merchants and paying a tax on the basis of their commissions (profits) 
only, rather than on the total gross receipts from the sale of these 
commodities. 

The following table summarizes the commodities subject to the 
replacement taxes and the special rates imposed. 



Articles subject to replacement taxes (single taxes imposed in lieu of all txim-over and 

import taxes) 



Articles 



Rate of tax 



When levied 



Coal, coke, etc 

Slaughtering and fresh meats: 

Calves and sheep 

Cattle other than calves... 

Hogs 

Horses 

Veal and mutton 

Beet and horse meat 

Pork 

Coffee 



Tea 

Sulphur. 
Sugar 



2.5 percent. 



At mine or coke plant or on 
importation. 

Before slaughter. 

Do. 

Do. 

Do. 
On importation. 

Do. 

Do. 
On importation (no domestic 
production). 

Do. 

Do. 
At factory or refinery or on 
importation. 

• Certain manufacturers using sugar in their products are entitled to a credit for one-half the replacement 
tax previously paid. 



20 centimes per kilogram. . . 
12.5 centimes per kilogram. 
25 centimes per kilogram... 
10 centimes per kilogram... 
40 centimes per kilogram... 
25 centimes per kilogram. .. 
50 centimes per kilogram. . . 
8 percent 



7 percent. 

5 percent. 

6 percent ' 



118 



SALES-TAX DATA 



Articles subject to replacement taxes (single taxes imposed in lieu of all turn-over and 

import taxes) — Contmued 



Articles 


Rate of tax 


When levied 


Denatured alcohol: 

Methyl 


3 percent 

6 percent 


On importation or produc- 
tion. 
Do. 


Ili'iiting and liiihtinK 


Alcohol and spirits for consumption 


47 and 8J^4 percent -. 


Do. 


Resinous products, turpentine, etc 

Petn>U'uni products: 

Crude or refined and pasoline 

Benzol, toluene, benzine. 

Oils and fatty bodies: 

Oleasinous fruits and grains _. 

Fish and vegetable oils 

Refined coconut oil 


2.5 percent -. 

Spercent - 

4 percent' ... 

Spercent 

C percent' 


Do. 

Do. 
Do. 

Do. 
Do. 
Do. 


Oleomargarine, emulsions, and animal 


4 percent 


Do. 


fats for consumption. 
Stearic and oleic acid and deglyccrined 




Do. 


oils. 
Soaps and candles 


7 percent 


Do. 


Industrial soaps if sent by producer to 
industrial user. 


4 percent 


Do. 



' Sale to manufacturer for further production, 2 percent. 
3 Sale to manufacturer for further production, 4 percent. 

This departure from the principle of the French law, i. e., taxing 
only one sale instead of all sales, has been somewhat in the nature of 
an experiment, and w^ill continue to be limited in application to but 
few articles. To be a proper subject for this form of taxation, a 
commodity should be — 

(a) Inclined more or less to be stable in price. 

(6) The sole line of the producer or dealer. 

(c) To a great extent in finished form and unlikely to be combined 
with another article or commodity to be taxed again in (another) 
finished form under the turn-over tax or replacement tax. 



THE LUXURY TAXES 

Luxury taxes are an important part of the present turn-over-tax 
system. These taxes were imposed before the sales tax was enacted, 
being first levied under the payments-tax system inaugurated during 
the war period. They are continued under the sales tax at much 
higher rates than the general turn-over levy of 2 percent, and sup- 
plant the latter tax. There are tw^o separate divisions to the luxury 
taxes: (a) The tax on luxury articles sold at retail, and (6) the tax 
on gross receipts of luxury hotels, restaurants, and so forth. The 
luxury taxes, of course, are imposed in lieu of the turn-over tax when 
the sale is made at retail. 

In the case of articles sold at retail there is a double standard of 
''luxury." Certain goods are considered de luxe because of their 
inherent nature, while others become luxuiy goods only when sold 
at retail above a certain price. The determination of what consti- 
tutes luxury articles is by the Minister of Finance, who issues dociees 
from time to time listiig such articles. These decrees are subject 
to legislative ratification, but have the force of law until Parliament 
rejects them. The present rate on articles which are classed as 
luxuries by their inherent nature is 6 percent, while those taxed as 
luxuries because selling above a fixed price are taxed at the rate of 
3 percent. The responsibility for the payment of the tax rests with 



SALES-TAX DATA HQ 

the seller, and unless otherwise provided or obviously not relevant 
the laws and regulations governing the turnover tax apply with full 
force to the luxury taxes. 

The standard of luxury for the hotel and restaurant tax is quite 
different from that under the luxur}^ tax on retail sales. An estab- 
lishment pays a luxurv rate on its gross receipts if it is judged "luxuri- 
ous," and there are two grades of luxury, to which different rates 
are applicable. Establishments of the first class pay a rate of 6 
percent if they include the tax in their sale price ancl 13 percent if 
the tax is added as a separate item. Second-class establishments are 
taxed at the rate of 3 percent if they include the tax in tbcir sale 
price and 4 percent if they do not. The classification of hotels and 
restaurants is handled by an official commission in each "department," 
with a commission of appeal in Paris. 

SPECIAL TAX ON RETAIL SAI,ES 

111 addition to the tax on industrial and commercial profits, levied 
under the iiicome-tax provisions of the internal revenue laws of 
France, there is levied a tax termed "taxe speciale sur le chiffre 
d'affaires," literally translated as a special tax on gross receipts. 
This tax is not considered a part of the sales tax, nor are the receipts 
from it included in statistics of sales-tax receipts published by the 
Ministry of Finance. The tax was first levied in 1918, and is adminis- 
tered by the income-tax administration. Its similarity to the turn- 
over tax is so decided that a brief mention of the tax seems to be 
pertinent to any discussion of the French sales-tax system. As can 
be seen it is solely a tax on sales. 

The tax is imposed on the amount of business (gross receipts, i. e., 
sales) transacted by enterprises having for their principal object the 
retail sale of provisions or goods when the amount of such business 
exceeds 1,000,000 francs, exclusive of exports. The amount of 
business turn-over is taken as the total amount of sales realized each 
year by the taxable enterprise. It comprises all the elements of the 
sales price and consequently all duties and taxes, as, for example, the 
general sales (turn-over) tax, which are incorporated therein. The 
tax also applies to banking, credit, savings, and capitalization enter- 
prises when the amomit of their annual turn -over exceeds 1,000,000 
francs. The present rates, which date from 1926, range from 0.0012 
percent on gross receipts of between 1,000,000 and 2,000,000 francs 
to a maximum of 0.006 percent on the excess over 200,000,000 francs. 
During the operation of the present rates, the annual receipts have 
been well over 100,000,000 francs. 

ADMINISTRATION . 

The collection of internal revenue in France is divided among three 
administrative groups— the direct-tax, indirect-tax, and registration 
administrations, all quite distinct from each other. There is another 
administration — customs — for collecting export and import duties. 
No new agency was created for the control and collection of the 
turn-over tax. The burden of collection fell upon the in(Hrect-tax 
administration and the registration administration, the former making 
the collection in communes of under 5,000 population and the latter 



120 SALES-TAX DATA 

ill tho larger communes. The direct-tax administration assisted the 
others in chocking the turnover-taxpayer's records of receipts. This 
division of control worked unsatisfactorily, and not until 1925 was 
the entire enforcement of the turn-over tax placed under the indirect- 
tax administration with the customs administration attending to 
levies on Imports and exports affected by the turnover taxes or re- 
placement taxes. With the administration and enforcement of the 
tax centralized, collections and control have become much more 
satisfactory. 

Under the law of June 25, 1920, the turn-over tax was due under a 
monthly payment system. The taxpayer was to prepare a statement 
of the previous month's receipts, calculate the tax, and make pay- 
ment when he sent in his statement before the end of the current 
month. Under later regulations, statements might be made on a 
quarterly, semiannual, or annual basis, but payments "on account" 
were due at least quarterly. Taxpayers under the forfait system are 
not required to send in any statement but must make quarterly 
payments on their allowed estimate. Taxpayers w^ith a permanent 
place of business established, and not on the forfait basis, are allowed 
to make an annual statement under the present law. 

Payment is made by cash, postal order, check, draft, or by other 
commonly accepted negotiable instruments. Stamps are not used 
in any instance except on articles of luxury sold at retail. 

During the first few years of the operation of the turn-over tax, 
evasions were more the rule than the exception. The law was new, 
there was doubt as to its continued existence, and the administra- 
tive bureau was inadequately forced and composed of several inde- 
pendent units. Due to the resultant lax enforcement the Government 
lost large sums properly due under the law. The actual receipts for 
the first year were less than 50 percent ot the estimated return of 
2,000,000,000 francs. 

The law required that merchants, or anyone continually or occa- 
sionally buying and reselling, should keep a record of all transactions 
subject to the tax. The burden of proving omissions of this duty fell 
on rather indifferent collectors and inspectors. Merchants posed as 
commission men when in fact they were not, and sales for cash of 
umnventoried stock could be completely concealed. 

The small merchants especially rebelled against keeping records of 
their transactions for monthly inspection and complained even more 
vociferously when the failure to keep such records resulted in more 
strict surveillance by the collector. Bookkeeping among this group 
was scarcely more detailed than a statement of annual gross receipts 
and many neglected that. The Government finally conceded to 
merchants with an annual gross for the previous year (by their 
records) of less than 48,000 francs (or 12,000 francs if they were 
intermediaries taxed on commissions, fees, etc.) the privilege of pay- 
ing on the basis of such receipts for the unsuing year. The taxpayer 
under this system would show his receipts for the closing year and 
on the basis of that w^ould pay his installments for the current year 
' (on a quarterly basis: 2 percent of one-fourth of the preceding year's 
gross receipts). By the act of December 31, 1921, this privilege was 
extended to merchants and commission men having an annual gross 
of 120,000 francs and 30,000 francs, respectively. This was called 



SALES-TAX DATA 121 

the "forfait" system; inaccurately, however, for in 1924 the true 
"forfait" system or estimated tax-base system was inaugurated. 

Under the true forfait system, the tax collectors estimated the 
business of the taxpayer by external indicia, i. e., number of employ- 
ees, size of establishment, equipment, social status of owner, mode of 
living, etc., and therefrom estimated the gross receipts of the business, 
and the taxpayer paid on the basis of that estimate. The taxpayer 
is not required to give any information or disclose any records unless 
he disputes the estimate or wishes to renounce the agreement to 
abide by the estim,ate. The Government may likewise renounce, 
but either party must so indicate that intention during the last two 
months of the year. The estimate lasts for two years and the tax as 
fixed for each year by this system is payable quarterly. Under the 
law of 1924 this system was available to merchants having gross 
receipts not in excess of 200,000 francs (or 40,000 francs in thecase of 
commission men) but under the law of 1927 the larger figure was 
raised to 300,000 francs. 

In 1922 out of 1,720,739 sales-tax payers, 553,806, or slightly over 
32 per cent, paid a yearly tax of less than 60 francs each, amounting to 
less than 1 percent of the total tax collected. Seventy-eight percent 
of the taxpayers could have been entirely exempted from the tax in 
1922 with a loss of only 10 percent in the total revenue from it. In 
1924 over 65 percent of the sales-tax payers paid on an estimated 
basis but their payments aggregated less than 10 percent of the total 
revenue from the levy. These figures indicate the extent of small- 
scale commerce in France and of evasion. 

The establishment of the forfait system, and of the replacement 
taxes, as well as more efficient administrative efforts have gone far in 
checking the evasion that was so prevalent during the early years of 
the tax. The legal evasion that can be accomplished by a dealer 
becoming a commission merchant can not be circumvented. How- 
ever, the replacement taxes on those commodities in the sale of which 
the merchandizing status was more often changed has retarded some- 
what this form of evasion. 

The automobile tax presents an interesting example of the difficulty 
or checking evasions that are apparently legal. The tax on passenger 
automobiles was placed at the luxury tax level and on commercial 
automobiles at the low turnover rate. This did not prevent the wide- 
spread use of commercial automobiles in transporting their owners 
and their families on purely pleasurable pursuits. When such use 
was proved an attempt was made to collect the higher tax. This 
presented so many difficulties aiid caused so much opposition that the 
Government finally provided a medium rate for commercial cars 
whenever the owner intended to put it to uses of pleasure, retaining 
the low turnover rate on strictly commercial automobiles. These 
rates were: Passenger car, 12 percent; semicommercial, 6 percent; 
commercial, 2 percent. The 1930 rates were 6, 3, and 2 percent, 
respectively. 

Disputes may arise between the taxpayer and the administration 
on several points; whether or not any tax is due; whether all gross 
receipts or commissions only are taxable; or whether or not certain 
gross receipts are exempt. Unless these disputes arc settled by agree- 
ment (conference) they are carried to the a(hninistrative tribunals, 
"Conseils interdepartementaux," which handle "direct-tax" cases. 



122 SALES-TAX DATA 

"Indirect tax" cases, and questions concerning construction of the 
civil law, are taken to the civil courts with the burden of proof on the 
taxpayer. However, although taken to "direct-tax" tribunals, the 
burden of proof in turnover tax cases is placed on the taxpayer, 
differing in that respect from other "direct-tax" cases. When the 
case first comes before this tribunal, a fact-finding committee is first 
appointed, composed of three members, one chosen by the taxpayer, 
one by the administration, and one by the court. The conclusions 
of this connnittee are submitted to the court and the law applied by 
the court in rendering a decision. Appeals from the "Conseils inter- 
depai tementaux" to the "Conseil d'Etat" are provided for, limited, 
however, to merely a review of the lower court's decision. This 
appeal, however, does not arrest execution of the lower court's 
judgment. 

The above procedure applies to appeals from additional assess- 
ments as well as claims for refunds and must be begun within two 
years. Other administrative boards are provided for securing a 
different estimated-tax base, or luxury classification. 

In the event that the administration is awarded a judgment for an 
additional assessment, it still enjoys no preference over other creditors 
in the case of the bankruptcy of the taxpayer. Recent decisions of 
the courts have held that the turnover tax is not a true indirect tax 
and that no claim to insure its payment attaches to the taxpayer's 
assets or personal effects. 



APPENDIX. 

British Purchase Tax Law. 

Ch. 48, 3 and 4 Geo. 6. 

Purchase Tax. 

General Provisions as to Purchase Tax. 

18, — (1) A tax, to be called purchase tax, shall be charged, subject 
to and in accordance with the provisions of this Part of this Act, on 
the wholesale value of all chargeable goods bought under chargeable 
purchases. 

(2) The following purchases, with the exception of purchases of 
goods by a registered wholesale merchant as stock for his business or 
by a registered manufacturer as materials, shall be chargeable pur- 
chases, that is to say — 

(a) any purchase, made from a wholesale merchant or manufac- 
turer (other than one who is not required by this Act to be 
registered) selling by wholesale, of goods which either — 

(i) are in the United Kingdom at the time of the pur- 
chase, or 

(ii) in the case of a purchase of unascertained goods, 
are in the United Kingdom at the time when the goods 
are appropriated to the purchase, or 

(iii) having been imported into the United Kingdom 
are entered for home use by or on behalf of the seller 
under the purchase; 

(6) in the case of goods imported into the United Kingdom which 
are entered for home use by or on behalf of the buyer under a 
purchase made before the goods are so entered, that purchase ; 
and 

(c) in the case of goods imported into the United Kingdom and 
entered for home use and not being the subject of a purchase 
which is a chargeable purchase under either of the two pre- 
ceding paragraphs, the earliest purchase thereof made on or 
after their being so entered: 

Provided that a purchase of goods imported into the United King- 
dom but not entered for home use shall not be chargeable a purchase 
under paragraph (a) of this subsection. 

A purchase which is a chargeable purchase by virtue only of para- 
graph (6) of this subsection is in this Part of this Act referred to "im- 
porter's purchase." 

(3) Tax shall be chargeable in respect of chargeable goods bought 
under a chargeable purchase notwithstanding that the purchase was 
made before the passing of this Act, but, except as provided by section 
thirty-seven of this Act, no tax shall be chargeable in respect of any 

123 

70095 — 42 9 



124 SALES-TAX DATA 

goods by reason of their being bought under any purchase if the 
goods — 

(a) in the case of a purchase other than an importer's purchase, 
have been delivered thereun(h^r before such date as may 
be specified as the date for the coming into operation of 
the tax in an order made by the Treasury and approved 
(whether before, on, or after that date) by a resolution of 
the Commons House of Parliament; or 

(6) in the case of an importer's purchase, have been entered for 
home use before that date. 

19.- — (1) Chargeable goods are goods falling within any of the 
classes specified in the first or second column of the vSeventh Schedule 
to this Act and not falling within any of the classes specified in the 
third column of that Schedule. 

(2) The Treasury may from time to time issue lists more particu- 
larly defining goods which are to be taken as falling within an}^ class 
of goods specified in the Seventh Schedule to this Act, and may at 
any time withdraw a list so issued or issue a new list in substitution 
therefor, and shall publish any list so issued, and notice of the with- 
drawal of any such list, in such manner as they think best for inform- 
ing persons appearing to them to be likely to be affected. 

A draft of any list proposed to be issued under this subsection shall 
be laid before the Commons House of Parliament and, if that House, 
within twenty-eight days from the date on which the draft is laid 
before it, by resolution disapproves the draft, the list shall not be 
issued, but subject as aforesaid it may be issued not earlier than the 
expiration of that period and shall, from the date of its issue and 
until withdrawn or superseded by the issue of a substituted list, be 
conclusive as to the interpretation of the provisions of the said 
Schedule to which it relates. 

(3) The tax shall be charged at the following rate, that is to say, — 

(a) in the case of goods falling within any of the classes specified 
in the first column of the Seventh Schedule to this Act and 
not falling within any of the classes specified in the second 
column of that Schedule, the basic rate, which shall be one- 
third of the wholesale value of the goods; 

(6) in the case of goods falling within any of the classes specified 
in the second column of the said Schedule, the reduced rate, 
which shall be one-sixth of the wholesale value of the goods. 

20. — (1) The Treasury shall have power from time to time by 
order — 

(a) to direct that the tax shall become chargeable, either at the 
basic rate or at the reduced rate, in respect of goods of any 
class in respect of which it is not} for the time being charge- 
able or that the tax shall cease to be chargeable in respect 
of goods of any class in respect of which it is for the time 
being chargeable; 

(b) to direct that the reduced rate shall be substituted for the 
basic rate, or the basic rate for the reduced rate, as the rate 
of the tax chargeable in respect of goods of any class in 
respect of which it is for the time being chargeable; 



SALES-TAX DATA 125 

(c) to make such amendments in the Seventh Schedule to this 
Act as are consequential on a direction given under either of 
the preceding paragraphs. 

(2) Where the Treasury propose to make an order under this section 
they shall publish, in such manner as they think best for informing 
persons appearing to them to be likely to be affected, notice of the 
proposal indicating generally the class of goods proposed to be dealt 
with by the order and the nature of the direction proposed to be given 
thereby, and the order shall not be made earlier than the expiration 
■of fom'teen days from the first publication of the notice. 

(3) An order under this section shall specify a date for its coming 
into operation and shall have effect, subject as provided in subsection 
(4) of this section, in respect of goods of the class to which it relates — 

(a) delivered on or after the specified date, if the purchase under 
which the goods are bought is other than an importer's 
purchase, or 

(6) entered for home use on or after the specified date, if the pur- 
chase is an importer's purchase. 

(4) An order under this section shall not have effect unless it is 
approved (either before, on, or after the specified date) by a resolu- 
tion of the Commons House of Parliament. 

21.- — (1) The wholesale value of any goods in respect of which 
tax is chargeable shall be taken to be the price which in the opinion 
of the Commissioners the goods would fetch, on a sale made at the 
time when the tax in respect of the goods becomes due by a person 
selling by wholesale in the open market in the United Kingdom to 
a retail trader carrying on business in the United Kingdom only, if 
no tax were chargeable in respect of the sale and it were made in 
the circumstances specified in the Eighth Schedule to this Act. 

(2) If, in ascertaining the amount of tax for which any person is 
accountable, any dispute arises as to the wholesale value of any 
goods, the question shall be referred to the arbitration of a referee 
^appointed by the Lord Chancellor, who shall not be an official of 
any Government Department, and the decision of the referee ^^ith 
respect to the matter in dispute shall be final and conclusive: 

Provided that this subsection shall not have effect, and tax shall 
'be chargeable on the wholesale value of the goods as fixed by the 
Commissioners, unless, witliin the prescribed period from the time 
when the Commissioners' opinion as to the wholesale value of the 
goods has been communicated to the person accountable or wdtliin 
such further period as they may allow, notice requiring a reference 
thereunder has been served on the Commissioners, and that person 
lias deposited with them the amount of the tax appearing on the 
basis of their opinion to have become due. 

(3) If the amount of the tax chargeable on the basis of the wholesale 
value of any goods as determined on a reference under the last pre- 
ceding subsection is less than the amount deposited with the Com- 
,missioners thereunder the excess shall be repaid. 



126 SALES-TAX DATA 

Ancillary Promsions as to Purchase Tax. — 

22. — (1) The pei-son accountable for tax chargeable shall — 

(a) where the purchase by virtue of which it is chargeable was-, 
made from a wholesale merchant or a manufacturer, be the- 
seller under that purchase; 

(b) where that purchase was made otherwise than from a whole- 
sale merchant or a manufacturer, and is a chargeable pur- 
chase by virtue of paragraph (6) or (c) of subsection (2) of" 
section eighteen of this Act, be the person by whom or on 
whose behalf the goods are entered for home use. 

(2) Tax chargeable in respect of any goods shall become due — 

(a) where the purchase by virtue of which it is chargeable is other- 
than an importer's purchase, on the delivery of the goods- 
under the purchase; 

(h) where the purchase by virtue of which it is chargeable is an 
importer's purchase, on the goods being entered for home use.. 

23. — (1) Every wholesale merchant whose business includes the 
selling of any chargeable goods, and every manufacturer whose 
business includes the selling of any chargeable goods, shall be regis-- 
tered under this Part of this Act: 

Provided that a person shall not be registered by reason of his- 
being such a merchant or such a manufacturer or both if the gross, 
takings from his sales of chargeable goods (excluding in the case of" 
such a manufacturer who is not also such a merchant any sales by 
retail of goods not made by him) have not on the average exceeded 
two thousand pounds per annum, or in the case of a business recently 
commenced are unlikely so to do. 

(2) A manufacturer who is not required by the preceding subsection 
to be registered under this Part of this Act shall be registered there-- 
under if he satisfies the Commissioners in the prescribed manner that- 
he uses chargeable goods in substantial quantities as materials. 

(3) Every person carrying on business in such circumstances that 
he is required under subsection (1) of this section to be registered 
shall make an application for registration in the prescribed form to* 
the Commissioners — - 

(a) if he is carrying on business in such circumstances as afore- 
said at the passing of this Act, before such date as may be 
prescribed; or 

(6) if he begins to carry on business in such circumstances as--, 
aforesaid, or of the circumstances of a business carried on by 
him become such as aforesaid, after the passing of this Act, 
before the expiration of fourteen days from the date when he 
begins so to carry on business, or when the circumstances of 
his business become such as aforesaid, as the case may be. 

(4) Where a wholesale merchant or manufacturer who is by virtue^ 
of the proviso to subsection (i) of this section not for the time being- 
registered becomes aware, or has reasonable cause for believing, that 
such a change in the circumstances of his business has occurred as to- 
render that proviso no longer applicable to him, he shall forthwith, 
give information to the Commissioners of the change^ 



SALES-TAX DATA 127 

(5) If any person fails to comply with any of the requirements of 
either of the two last preceding subsections, he shall be liable to a 
penalty of one hundred pounds and to a further penalty of ten pounds 
for each day during which the failure continues. 

(6) The Commissioners shall register every person who is required 
by this Part of this Act to be registered and shall, on his registration, 
issue to him a certificate thereof. 

(7) Where a person who is registered ceases to be required by this 
Part of this Act to be registered the Commissioners shall cancel his 
registration. 

(8) Not less than fourteen days before registering a person, other- 
wise than in accordance with an application for registration made by 
him, or cancelling the registration of a registered person, the Com- 
missioners shall serve notice on him of their intention to register him 
or to cancel the registration, as the case may be. 

(9) The Treasury may by order direct that the proviso to subsec- 
tion (i) of this section shall have effect with the substitution, for the 
amount of two thousand pounds per annum therein mentioned, of 
such larger or smaller amount as may be specified in the order, and 
may from time to time vary an order so made: 

Provided that an order made under this subsection shall not have 
effect until it is approved by a resolution of the Commons House of 
Parliament. 

24. — (1) A purchase shall be deemed to be a purchase of goods by 
a registered wholesale merchant as stock for his business, or by a 
registered manufacturer as materials, if a representation is made to 
the seller in the prescribed manner and at the prescribed time by the 
buyer that he is the holder of a certificate of registration issued under 
this Part of this Act and that he intends to sell the goods or to use 
them as materials, and not otherwise: 

Provided that, in the case of a purchase made — 

(a) by a registered person, otherwise than in the United Kingdom, 

or 
(6) by a person required to be registered, before the date on which 

he is so registered, 

the purchase shall be deemed to be such a purchase as aforesaid if the 
Commissioners are satisfied, on a representation to that effect made 
to them, that the purchase was made as mentioned in paragraph (a) 
or (6) of this proviso and that the buyer intended to sell the goods or 
to use them as materials. 

(2) If any person for the purposes of the preceding subsection makes 
a false representation as to his intention to sell goods or to use them 
as materials, he shall be liable to a penalty of five hundred pounds, 
so however that the court may, if it thinks fit, in lieu of ordering him 
to pay the said penalty order him to be imprisoned for a term not 
exceeding two years. 

(3) If any person for the purposes of subsection (1) of this section 
falsely represents that he is the holder of a certificate of registration 
issued under this Part of this Act or that he is registered thereunder 
or is required so to be, the amount of any tax which would have been 
chargeable in respect of the purchase in question if the representation 
had not been made to the seller, or had not been acted on by the 



128 SALES-TAX DATA 

Commissioners, as the case may be, shall be recoverable from that 
person in like manner as if it had been chargeable and he had been' 
accountable therefor, without prejudice to any punishment to which 
he is liable luider section thirty-five of this Act. 

25. — (1) Where a wholesale merchant or manufacturer who is 
required by this x\ct to be registered appropriates or applies any charge- 
able goods in his ownership, the property in which he acciuired under a 
purchase of goods as stock for his business or as materials, or, in the 
case of a manufacturer, any chargeable goods which have been made 
by him or which are the result of a process applied by him, either — 

(a) to the purposes of any business carried on by him of selling 
chargeable goods by retail (otherwise than to registered manu- 
facturers as materials), or 

(6) to the purposes of any business carried on by him of letting 
out chargeable goods on hire, or 

(c) to any other purpose not being a sale of the goods under a 
purchase which is a chargeable purchase or a sale of the goods 
to a registered wholesale merchant as stock for his business 
or to a registered manufacturer as materials, 

the appropriation or application shall be treated for the purposes of 
this Part of this Act as if it were a chargeable purchase, he shall be 
accountable for the tax chargeable in respect of the goods, and the 
tax shall become due at the time of the appropriation or application. 

(2) A registered wholesale merchant or manufacturer who carries 
on any business of selling chargeable goods by retail, or of letting out 
chargeable goods on hire, shall keep such records as the Commissioners 
may require him to keep and in such form as they may require, and if 
he fails so to do he shall be guilty of an offence against this Part of this 
Act. 

26. — (1) Where the Commissioners are satisfied that a person 
makes, for the purposes of a business of selling by retail carried on by 
him, purchases of chargeable goods which in value and character are 
such as in the ordinary course of trade are made by wholesale mer- 
chants, he shall be registered under this Part of this Act. 

(2) This Part of this Act, other than the provisions of subsections 
(1) to (5) of section twenty-three of this Act, shall have effect in rela- 
tion to a person required by this section to be registered as it has 
effect in relation to a wholesale merchant, and references in this Part 
of this Act to a wholesale merchant shall be construed accordingly. 

27. The seller of chargeable goods under a chargeable purchase made 
in the United Kingdom after the date specified for the coming into 
operation of the tax in an order approved under subsection (3) of 
section eighteen of this Act shall add to any invoice or similar docu- 
ment deliver by him to the buyer a statement indicating the amount 
due from the buyer to the seller by reference to tax for which the 
seller may be accountable in respect of the purchase. 

28. — (1) Where is respect of goods bought under a purchase made 
before the date on which approval is given by the Commons House 
of Parliament to an order specifying the date for the coming into 
operation of the tax, or directing that the tax shall become cliargea,ble 
in respect of goods of a class within which those goods fall, or that 
the basic rate shall be substituted for the reduced rate in respect of 
such goods, any tax which would not have been chargeable if the 



SALES-TAX DATA 129 

order had not been approved becomes chargeable, or any tax which 
would have been chargeable at the reduced rate if the order had not 
been approved becomes chargeable at the basic rate, the seller may, 
in the absence of agreement to the contrary, recover, as an addition 
to the consideration, a sum equal to the amount of the tax chargeable 
in respect of the goods, or of the excess of that amount over what it 
would have been if the order had not been approved, as the case 
may be. 

(2) Where in respect of goods bought under a purchase made before 
the date on which approval is given by the Commons House of Parlia- 
ment to an order directing that the tax shall cease to be chargeable 
in respect of goods of a class within which those goods fall, or that the 
reduced rate shall be substituted for the basic rate in respect of such 
goods, any tax which would have been chargeable if the order had not 
been approved does not become chargeable, or any tax which would 
have been chargeable at the basic rate if the order had not been 
approved becomes chargeable at the reduced rate, the buyer may, in 
the absence of agreement to the contrary and if the seller has had in 
respect of the goods the benefit of the tax not becoming chargeable 
or becoming chargeable at the reduced rate, deduct from the con- 
sideration a sum equal to the amount which would have been the 
amount of the tax chargeable in respect of the goods if the order had 
not been approved or to the amount by which the tax chargeable 
in respect of the goods is less than it would have been in that event, 
as the case may be. 

29. — (1) Where goods bought under a purchase which is chargeable 
purchase by virtue of paragraph (a) of subsection (2) of section 
eighteen of this Act, or goods appropriated or applied as mentioned 
in section twenty-five of this Act, are shown to the satisfaction of the 
Commissioners to have been exported from the United Kingdom by 
the seller under the purchase, or by the person by whom the goods 
were so appropriated or applied, as the case may be, the tax which 
apart from this provision would be chargeable in respect of the goods 
shall not be chargeable. 

(2) The Treasury may by order give such directions as they think 
proper for the payment, on the exportation from the United Kingdom 
of goods of any class specified in the order by a person not being a 
registered wholesale merchant or manufacturer, or by such a whole- 
sale merchant or manufacturer who has bought the goods otherwise 
than as stock for his business or as materials, of an allowance for tax 
paid or payable in respect of the goods exported or goods of any class 
specified in the order used by that person in making the goods ex- 
ported, where it is shown to the satisfaction of the Commissioners — ■ 

(a) that that person bought from such a wholesale merchant or 
manufacturer selling by wholesale, or imported into the 
United Kingdom, the exported goods or goods of the specified 
class used by him in making the exported goods; 

(b) that there has been a chargeable purchase of the exported 
goods, or of the goods used in making them, as the case may 
be, and that the tax chargeable in respect thereof has been, 
or will be paid ; and 

(c) that the exported goods have not been used. 



130 SALES-TAX DATA 

(3) The amount of an allowance to be paid under the last preceding 
subsection shall be either (as may be provided by the order) — 

(a) the amount of the tax referred to in paragraph (b) of that 
subsection; or 

(6) an amount calculated in accordance with provisions in that 
behalf of the order, which provisions shall be such as will in 
the opinion of the Treasury secure that the aggregate of the 
amounts of allowances paid in respect of goods of any class 
shall not exceed the aggregate of the amounts chargeable by 
way of tax in respect of goods of that class. 

(4) An order made under this section may be varied or revoked by 
a subsequent order made by the Treasury. 

(5) In this section references to the exportation of goods from the 
United Kingdom include references to the shipment of goods as ships' 
stores. 

Administration and collection of the tax. 

30. — (1) The tax shall be under the care and management of the 
Commissioners. 

(2) The Commissioners may do all such acts as may be deemed 
necessary and expedient for raising, collecting, receiving, and account- 
ing for the tax in the like and as full and ample a manner as they are 
authorised to do with relation to any duties under their care and 
management. 

(3) All money and securities for money collected or received in Great 
Britain for or on account of the tax shall be placed to the general 
account of the Commissioners kept at the Bank of England under 
section twenty-one of the Customs Consolidation Act, 1876. 

31. — (1) Tax becoming due shall be accounted for and paid in 
accordance with regulations made under tliis Part of tliis Act. 

(2) Tax shall be recoverable as a debt due to His Majesty from the 
person accountgnle therefor, and, where the aggregate amount of tax 
payable by a person accountable therefor at the time of the com- 
mencement of proceedings for the recovery thereof is less than fifty 
pounds, that tax may, without prejudice to any other mode of re- 
covery thereof, be recovered by the Commissioners from that person 
summarily as a civil debt. 

(3) On the entry for home use of any chargeable goods imported 
into the United Kingdom, the Commissioners may require security to 
be given to them for any tax which may become chargeable in respect 
thereof by reason of their being bought under a purchase which is a 
chargeable purchase by virtue of paragraph (c) of sucbsetion (2) of 
section eighteen of this Act. 

(4) On the entry for home use of any goods in respect of which tax 
then becomes due, or in respect of which the Commissioners requhe 
security to be given under the last preceding subsection, the entry 
shall not be signed by the proper officer of customs and excise unless 
the proper tax is paid, or the security required is given, as the case 
mav be, in accordance with regulations made under this Part of this 
Act. 

32. Where a person who is accountable for any tax, or on whom 
any duties are imposed by this Part of this Act or regulations made 
thereunder, is not resident in the United Kingdom, the Commissioners 



SALES-TAX DATA 131 

may, by notice in writing served on any agent, manager or factor, who 
is resident in the United Kingdom and has acted on behalf of that 
person in the matters by reference to which that person is accountable 
or those duties are imposed, direct that he shall be substituted for 
that person as the person accountable for the tax or that he shall be 
under an obligation to discharge those duties or any of them. 

Miscellaneous Provisions as to Purchase Tax. 

33. — (1) The Commissioners may make regulations providing for 
any matter for which provision appears to them to be necessary for 
the purpose of giving effect to the provisions of this Part of this Act 
and of enabling them to discharge their functions thereunder, and in 
particular, but without prejudice to the generality of the preceding 
words, — 

(a) for ascertaining all chargeable purchases and all such appro- 
priations and applications as are mentioned in section twenty- 
five of this Act, and the amounts of tax chargeable by virtue 
thereof, and for requiring security for the payment of tax; 

(b) for imposing upon persons who appear to the Commissioners 
to be carrying on a business which consists of or includes that 
of a wholesale merchant or manufacturer, or the making of 
such purchases as are mentioned in section twenty-six of 
this Act, the duty to furnish to the Commissioners within 
such period as may be prescribed information in the pre- 
scribed form of any facts relevant for determining whether 
such persons ought to be registered or the matters in respect 
of which they ought to be registered or of any other facts 
relating to the business; 

(c) for imposing upon registered persons, and upon such other 
persons as may be prescribed in relation to registered persons 
who have died or become subject to any incapacity, the duty 
to furnish to the Commissioners within such period as may be 
prescribed information in the prescribed form of any facts 
by virtue of which their registrations ought to be varied or 
cancelled ; 

(d) for enabling persons to be treated as registered wholesale 
merchants or manufacturers during a limited period by way 
of representation of registered wholesale merchants or manu- 
facturers who have died or become subject to any incapacity; 

(e) as to the form, issue, continuance in effect, variation, custody, 
use, and surrender, of certificates of registration; 

if) for requiring registered persons to keep accounts, and to 
make returns of purchases made from or by them, and of any 
appropriations or applications such as are mentioned in section 
twenty-five of this Act made by them, and of the amounts 
of tax for which they are accountable, in respect of such 
periods, in such form and containing particulars with respect 
to such matters, as may be prescribed, and to pay the amounts 
of tax appearing by the returns to be due from them at such 
times as may be prescribed ; 

(g) for authorising distress to be levied on the goods and chattels 
of a person neglecting or refusing to pay, in accordance with 
regulations made under the last preceding paragraph, tax 



132 SALES-TAX DATA 

wliich he is thereby required to pay, and for applying and 
adapting, with or without modification, to the levying of 
distress under regulations made under this paragraph any 
of the provisions of subsections (2) to (5) of section one 
hundred and sixty-two of the Income Tax Act, 1918; 

(h) for requiring any persons concerned with the purchase or 
importation of goods or dealings with imported goods to 
furnish to the Commissioners within such time and in such 
form as they may require such information relating to the 
goods or to the purchase or importation thereof or dealings 
therewith as they may specify, and to produce for inspection 
any books or accounts or other documents of whatever nature 
relating thereto ; 

(i) for applying and adapting, with or without modification, to 
the tax and to repayments and allowances, and to registered 
persons, any enactment relating to any duty or drawback of 
excise or customs or to persons carrying on any trade subject 
to the law of excise ; 

(j) for prescribing anything which by this Part of this Act is 
required or authorised to be prescribed. 

(2) If any person contravenes or fails to comply with any of the 
requirements of regulations made under this Part of this Act he shall 
be guilty of an offense against this Part of this Act. 

34. — (1) Regulations made by the Commissioners under this Part 
of this Act, and any order made by the Treasury under section 
twenty-nine of this Act, shall be laid before the Commons House of 
Parliament as soon as may be after the making thereof, and if that 
House within twenty-eight days from the date on which any such 
regulations or order are or is laid before it resolves that the regulations 
or order- be. annulled, the regulations or order shall thereupon cease 
to have effect but without prejudice to anything previously done 
thereunder or to the making of new regulations or a new order. 

(2) In reckoning any period of twenty-eight days specified in this 
Part of this Act in relation to the laying of orders, regulations or lists, 
before the Commons House of Parliament, no account shall be taken 
of any time during which Parliament is dissolved or prorogued or 
during which the said House is adjourned for more than four days. 

35. — (1) Any person guilty of an offence against this Part of this 
Act in respect of which no other penalty is therein specified shall be 
liable to a penalty of Mij pounds. 

(2) If, with intent to deceive, any person, for the purposes of this 
Part of this Act or of regulations made thereunder, produces, furnishes, 
sends or otherwise makes use of, any book, account, estimate, return, 
or other document, which is false in a material particular, he shall be 
liable to a penalty of five hundred pounds. 

(3) If, in furnishing any information for the purposes of this Part 
of this Act or of regulations made thereunder, any person rnakes any 
statement which he knows to be false in a material particular, or 
recklessly makes any statement which is false in a mateiial particular, 
he shall be liable to a pcnalt}^ of five hundred pounds. 

(4) If, with intent to deceive, any person counterfeits, or uses, or 
lends to, or allows to be used by, any other person, a certificate of 
registration issued under this Part of this Act, or makes or has in hi& 



SALES-TAX DATA 133 

possession any docimient so closely resembliiig such a certificate as to 
be calculated to deceive, he shall be liable to a penalty of five hundred 
poimds. 

(5) The court may, if it thinks fit, in lieu of ordeiing a person who 
is liable to a penalty under subsection (2) (3) or (4; of this section to 
pay that penalty, order him to be imprisoned for a term not exceeding 
two years. 

36. The provisions of the Xiuth Schedule to this Act shall have 
effect in relation to the enforcement of this Part of this Act and in 
relation to the service of notices thereunder. 

37. If the Commissioners are satisfied that chargeable goods have 
been delivered, entered for home use, or appropriated or apphed as 
mentioned in section twenty-five of this Act, in the coiu-se of any busi- 
ness during the period between the second day of Jidy, nineteen hun- 
dred and forty, and the date specified for the coming into operation 
of the tax in an order approved under subsection ( 3 ) of section eighteen 
of this Act on a scale or in a manner not in accordance with the ordi- 
nary practice of the business, the Commissioners, may, as respects all 
or any of those goods, by notice in writing served on the persoD who, 
if they had been delivered, or so entered, appropriated or apphed, 
after the date of the coming into operation of the tax, would have 
been accoxmtable for the tax chargeable in respect thereof, direct that 
the tax shall be chargeable as if they had been dehvered, or so entered, 
appropriated or apphed, after that date. 

38. In the apphcation of this Part of this Act to Scotland — 

(o) for any reference to the levying of distress on goods and 
chattels there shall be substituted a reference to execution 
by* the poinding of goods and eft'ects ; and for any reterence 
to subsections (2) to (5) of section one himdred and sisty-two 
of the Income Tax Act 1918 there shah be substituted a ref- 
erence to section one hundred and sixty-six of the said Act; 

(b) subsection (2) of section twenty -one shall, in any case where 
the person accountable for the tax has his principal place of 
business m Scotland, have effect as if for the reference to 
the Lord Chancellor there were substituted a reference to 
the Lord President of the Court of Session. 

39. (1) In the apphcation of this Act to Northern Ireland subsec- 
tion (2) of section twenty-one shaU, m any case where the person ac- 
countable for the tax has his piincipal piace of business in Northern 
Ireland, have effect as if for the reference to the Lord Chancellor 
there were substituted a reference to the Lord Chief Justice of 
Northern Ireland. 

(2) The Government of Ireland Act. 1920. shall have effect as if 
the tax were one of the taxes mentioned in subsection (1) of section 
twenty-two of that Act (which relates to reserved taxes). 

(3j Payment into the Exchequer of money and securities for money 
collected or received in Northern Ireland for or on account of the 
tax shall be made in such manner as the Treasury may direct. 

40. — (1) If an Act of Tynwald is passed making in relation to the 
Isle of ^lan provision sinidar to the provision made by this Part of 
this Act in relation to the Lmted Kingdom, His Majesty may by 
Order in Coimcd make provision, in relation to goods removed from 



134 SALES-TAX DATA 

or into the Isle of Man into or from the United Kingdom, for securing 
that, so long as the said Act of Tynwald is in force and the classes 
of goods in respect of which tax is chargeable thereunder and the 
rates of tax so chargeable in respect of those classes of goods are the 
same respectively as the classes of goods in respect of which tax is 
chargeable under this Part of this Act and the rates of tax so charge- 
able in respect of those classes of goods, — 

(a) such a removal shall not be treated for the purposes of either 
enactment as an importation or exportation of the goods; 

(b) a purchase which would be a chargeable purchase under 
paragraph (a) of subsection (2) of section eighteen of this 
Act or under the corresponding provision of the said Act of 
Tynw^ald if all persons registered under either Act were 
registered under a single Act extending both to the United 
Kingdom and to the Isle of Man, and if for references in this 
Part of this Act to the United Kingdom and for references 
in the said Act of Tynwald to the Isle of Man there had been 
substituted references to the United Kingdom and the Isle 
of Man as a whole, shall be a chargeable purchase under one 
or other Act but not under both of them; and 

(c) a purchase which in that case would not be a chargeable 
purchase as aforesaid shall not be a chargeable purchase 
under either enactment; 

and may direct that this Part of this Act and the said Act of Tynwald 
shall have effect subject to such modifications as may be requisite for 
giving effect to the purposes of the Order. 

(2) An Order in Council made under this section may be varied 
or revoked by a subsequent Order in Council. 

41. — (1) In this Part of this Act, unless the context otherwise 
requires, the follow.ing expressions have the meanings hereby assigned 
to them respectively, that is to say — 

"the Commissioners" means the Commissioners of Customs and 
Excise ; 

"entered for home use" means entered for home consumption or 
home use in accordance with the enactments relating to the 
customs, and "entry" has a corresponding meaning; 

"goods" has the same meaning as in the Sale of Goods Act, 1893; 

"importer's purchase" has the meaning assigned to it by sub- 
section (2) of section eighteen of this Act; 

"manufacturer" means a person who carries on in the United 
Kingdom a business of making goods or of applying any 
process in the course of the making of goods, so however tliat 
for the purposes of this definition the making up of drugs 
according to a formula prescribed by reference to the needs 
of a particular patient shall not be regarded as the making 
of goods; 

"materials" means, in relation to a manufacturer, goods to which 
some process is applied by him by way of business in the 
course of the making of goods, or which are used by him as 
aforesaid as parts of or accessories for the goods made; 

"prescribed" means prescribed by regulations made under this 
Part of this Act; 



SALES-TAX DATA 135 

"process" includes, in relation to the making of goods, the as- 
sembling of parts of the goods; 
"purchase" means any contract which is a contract of sale with- 
in the meaning of the Sale of Goods Act, 1893, and also a con- 
tract similar to such a contract in other respects but made for 
a consideration wholly or partly in money's worth and not, or 
not only, in money, and includes any transaction, in whatso- 
ever form expressed, in so far as its effect is in substance the 
same as the effect of such a contract as aforesaid, and references 
to goods being bought include, in relation to a purchase made 
for a consideration not, or not only, in money, and in relation 
to any such transaction as aforesaid, references to goods being 
acquired in any manner; 
"selling by retail" means selling goods by way of business other- 
wise than by wholesale, and "retail trader" means a person 
who sells by retail and not otherwise; 
"selling by wholesale" means selling goods of any class to a per- 
son who carries on a business of selling goods of that class; 
"selling goods to a manufacturer as materials" means selling 
goods of any class to a manufacturer who uses goods of that 
class as materials; 
"tax" means tax chargeable by virtue of this Part of this Act; 
"wholesale merchant" means a person who carries on in the 
United Kingdom a business of selling by wholesale goods 
bought by him, and includes a person who carries on in the 
United Kingdom a business of selling to manufacturers as 
materials goods bought by him. 

(2) For the purposes of this Part of this Act, if at the time when a 
purchase is made the buyer is in possession of the goods bought there- 
under, or of part thereof, delivery of the goods, or of that part thereof, 
as the case may be, under the purchase shall be deemed to have taken 
place on the making of the purchase. 

(3) For the purposes of this Part of this Act, a person shall be 
deemed to make goods, or to apply a process, if the goods are made, 
or the process is applied, by another person to his order under any 
form of contract other than a purchase. 



STATUTORY RULES AND ORDERS RELATING TO BRITISH 

PURCHASE TAX 

1940. No. 1552. Purchase Tax 

The Purchase Tax Regulations, 1940, dated August 23, 1940, Made 
by the Commissioners of Customs and Excise Under Part V of the 
Finance (No. 2) Act, 1940 {3 & 4 Geo. 6. c. 48) 

The Commissioners of Customs and Excise in exercise of the powers 
conferied upon them by Part V of the Finance (No. 2) Act, 1940 
(hereinafter referred to as "the Act"), hereby make the following 
Regulations: — 

1. Apphcations from persons carrying on business in such circum- 
stances that they are required under subsection (1) of section 23 of 
the Act to be registered shall be made in the form approved by the 
Commissioners and containing such particulars of the business carried 
on by such persons as the Commissioners may require. 

Such applications shall, if the person so required to be registered 
is carrying on business at the passing of the Act, be made before the 
20th day of September, 1940. 

2. A manufacturer who is not required by subsection (1) of section 
23 of the Act to be registered shall, if he desires to be registered under 
the provisions of subsection (2) of the said section 23, for the purpose 
of satisfying the Commissioners that he uses chargeable goods in 
substantial quantities as materials, apply to the Commissioners for 
registration and furnish to them such information as they may 
require for the purpose of being so satisfied in such form and manner 
as they may direct. 

3. Every person who appears to the Commissioners to be carrying 
on a business which consists of or includes that of a wholesale merchant 
or manufacturer or the making of such purchases as are mentioned in 
section 26 of the Act shall furnish to the Commissioners such informa- 
tion relating to his business within such time and in such form as they 
may require for the purpose of determining whether such person ought 
to be registered. 

4. On the entry for home use of any chargeable goods imported into 
the United Kingdom security for tax which may become chargeable 
in respect thereof by reason of their being bought under a purchase 
which is a chargeable purchase by virtue of paragraph (c) of subsection 
(2) of section 18 of the Act shall be given by the person by whom or 
on whose behalf the goods are entered, in such form as the Com- 
missioners may require. 

5. On the entry for home use of any goods in respect of which tax 
then becomes due the proper tax shall be paid to the proper officer of 
Customs and Excise upon delivery of the entry. 

6. Wliere a registered person becomes aware or has reasonable cause 
for believing that the circumstances of his business have so changed 

136 



SALES-TAX DATA 137 

that his registration ought to be varied or cancelled he shall forthwith 
give information of such change to the Commissioners specifying all 
facts relevant for determining whether the registration ought to be 
varied or cancelled. 

7. Every person concerned with the purchase or importation of 
goods or dealings with imported goods shall furnish to the Commis- 
sioners within such time and in such form as they may in any case 
require information relating to the goods or to the purchase or impor- 
tation thereof or dealings therewith as they may specify and shall 
produce at his premises or elsewhere as the Commissioners may appoint 
for inspection to an officer or other official of Customs and Excise 
upon demand any books or accounts or other documents of whatever 
nature relating thereto. 

8. The representation by the buyer for the purpose of subsection 
(1) of section 24 of the Act (which relates to purchases that are to be 
treated as purchases of wholesale merchant's stock or manufacturer's 
materials) shall be made by the buyer delivering to the seller before 
delivery of the goods under the purchase a written order for the goods 
containing a statement in wiiting in one of the following forms as 
the case may be: 

In the case of a registered wholesale merchant, or of a person 
registered under the provisions of section 26 of the Act: — 

"Purchase by , holder of Purchase 

Tax Certificate No. of goods as stock intended 

for sale by him (them)." 
In the case of a registered manufacturer: — 

''Purchase by , holder of Purchase 

Tax Certificate No. of goods as materials intended 

for use by him (them) as materials." 

Any such statement shall be signed by the registered person or on 
his behalf by some person duly authorized by him in writing in a form 
approved by the Commissioners and shall be retained by the seller 
and produced on demand to the proper officer or other official of the 
Customs and Excise. 

9. For the purpose of the proviso to subsection (2) of section 21 
of the Act (which relates to disputes as to the wholesale value of any 
goods), the prescribed period shall be a period of fourteen days from 
the time when the Commissioner's opmion as to the wholesale value 
6f the goods has been communicated to the person accountable for 
the tax. 

10. (a) The Interpretation Act, 1889, applies to the interpretation 
of these Regulations as it apphes to the mterpretation of an Act of 
Parliament. 

(b) These Regulations may be cited as "The Purchase Tax Regu- 
lations, 1940." 

Signed by order of the Commissioners of Customs and Excise. 

O. ]\luNDy, 

Secretary of the Commissioners of Customs and Excise. 

Custom House, London, E. C. 3. 

23rd August 1940. 



STATUTORY RULES AND ORDERS RELATING TO BRITISH 

PURCHASE TAX 

1940. No. 1771. Purchase Tax 

The Purchase Tax (Commencement) Order, 1940, dated October 3, 
1940, made by the Treasmy under section 18 of the Finance (No. 2) 
Act, 1940 (3 & 4 Geo. 6. c. 48) 

The Lords Commissioners of His Majesty's Treasury, in exercise of 
the power conferred on them by subsection (3) of section 18 of the 
Finance (No. 2) Act, 1940, and of all other powers enabling them in 
that behalf, hereby make the following Order: — 

1. The date for the coming into operation of the tax chargeable by 
virtue of Part V of the Finance (No. 2) Act, 1940, shall be the twenty- 
first day of October, nineteen hundred and forty. 

2. This Order may be cited as the Purchase Tax (Commencement) 
Order, 1940. 

Dated this third day of October, 1940. 

KiNGSLEY Wood, 

W. W. BOULTON, 

Two of the Lords Commissioners of 

His Majesty's Treasury. 

138 



REGISTRATION FOR BRITISH PURCHASE TAX PURPOSES 

Instructions for Completing This Form 

1. All manufacturers of, and dealers by wholesale in, goods charge- 
able with Purchase Tax are (except as described at 2, below) required 
to register for Purchase Tax purposes. A full list of the chargeable 
goods and full particulars regarding registration, etc., are contained 
in Notice No. 74, copies of which may be obtained from any Customs 
and Excise Office or from the Secretaries' Office, Custom House, 
London, E. C. 3. The instructions in the Notice and on this form 
should be carefully followed. 

2. For the present firms are not required to register if their gross 
takings from sales of chargeable goods (excluding in the case of a 
manufacturing retailer, any retail sales of goods not made by him) 
do not on the average exceed £2,000 a year. In such cases no appli- 
cation for registration should be made. 

3. All firms required to register are advised to do so without delay. 
Heavy penalties are incurred by failing to apply for registration 
before the prescribed date, which will be annomiced shortly, and 
firms not registered when the tax comes into operation will be unable 
to obtain supplies for their business at a tax free price. 

4. One application only should be made in respect of each business 
for which registration is necessary. This will include all its branches 
provided they all trade under the same name. A separate application 
should be made where necessary in respect of any branches trading 
under a different name or as separate limited companies. 

5. The form must be signed by the proprietor of the business if an 
individual; by a partner in the case of a private firm; by a director or 
the secretary in the case of a limited company. In the case of foreign 
firms carrying on manufacture or wholesale trade of a registrable 
character in the United Kingdom the form should be signed by the 
agent, manager or factor for the firm in this country (see paragraph 15 
of Notice 74). 

6. In every case a sheet of the firm's business letter paper should be 
appended. It should be used to supplement the information given on 
the form where the space provided on the latter is insufficient. 

7. The form when completed should be sent to the Customs and 
Excise Officer in whose Station the firm's principal address is situated. 
The address of the Officer may usually be obtained at the nearest 
Post Office. The addresses in London are shown in the footnote 
overleaf. 

139 



(i9V)S,-) — 42 10 



140 



SALES-TAX DATA 



APPLICATION FOR REGISTRATION 

Full name or traHinjj; style of the business for which 
registration is required 

Full nanie(s) of proprietor or proprietors of the busi- 
ness 



Principal address of the business, i. e., address where 
principal accounts are kept and from which returns 
of tax will be made 

Ordinary trade description of the business carried on_ 

Class(es) of chargeable goods: 

(a) manufactured and sold 

(b) bought and re-sold by wholesale 

(c) used as materials in making non-chargeable 

goods 

Estimated annual value of the materials used under 
(c) and of the goods produced therefrom 



[Note. — (i) Only the Class numbers as shown in the list in Notice No. 74 need 
be given, 
(ii) No particulars need be given under (5) (c), where registration is 
applied for under 5 (a) or 5 (b).] 

G. Full list of premises (if different from (3)) where 

manufacture or wholesale trade specified at (5) is 

carried on. (Addresses of retail shops belonging 

to the business are not required, unless they are 

engaged in manufacturing chargeable goods, e. g., 

tailoring.) 



If the value on which tax should be charged will have 
to be calculated under paragraph 23 (d) of Notice 
No. 74, state what percentage deduction from re- 
tail selling prices (excluding tax) you claim should 
be made in order to arrive at a fair open market 
wholesale selling price 



riass of 
goods 



Pcicenlapc 

deduction 

claimed 



I, 



(full name of signatory) hereby declare that the foregoing particulars are true and 
complete to the best of my knowledge and belief. 

Signed 

* Proprietor"! 

*Partner 1 of the business, firm or company in resi)ccl of 
*Director ( which registration is applied for. 
^Secretary J 

Date 

*Delete as inapplicable. 

For Official Use 



Station Date Stamp 


Examined-. 

Registered J 

Class 


Allowed Refused 

dumber 




f Goods 


Deduction from S. P. allowed 
















Form P. T. 5 sent 

Form P. T. 6 sent 


Initials 

Initials 

. _ Initials 


London 
Postal 
District 


Address of OfHce 


London 
Postal 
District 


Address of Ofhcc 



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